Consumer Watchdog Report Warns of Enron All Over Again As Governor Jerry Brown And Electricity Deregulation Era Fixers Poised To Rip Off California Ratepayers With Revival Of Western Power Trading Casino
LOS ANGELES, June 18, 2018 /PRNewswire-USNewswire/ -- California leaders are being pressed by former allies of Enron and energy traders who ripped off the state to gamble away California's energy future on the revival of a plan for a Western regional power trading system that will benefit billionaires and Wall Street and put ratepayers and the environment at risk, Consumer Watchdog finds in a new report.
The report reveals that legislation reauthorizing an Enron-era law, AB 813, authored by Assembly Member Chris Holden and to be heard Tuesday in the California Senate, is a scheme that will leave the market open to trading manipulation that will raise electricity rates. The plan will also undermine California's control of carbon emissions and pollution from power plants by empowering Trump appointees to overturn California laws.
Read the report, Betting Against The House: How California's Leaders Could Gamble Away Our Energy Future On A Western Power Trading Casino, at https://consumerwatchdog.org/sites/default/files/2018-06/BettingAgainstTheHouse.pdf
"Why would Californians support such a plan?" the report asks. "It's backed by Governor Jerry Brown, a coterie of his former and current appointees, fixers for energy billionaires, and remarkably, representatives of 'mainstream environmental groups' such as such as the Natural Resources Defense Council's Ralph Cavanagh that once promoted Enron."
The report reveals, for example, that Cavanagh, the chief backer of the Western trading scheme now and of deregulation in the late 1990s, vouched for Enron, claiming, "Can you trust Enron? On stewardship issues and public benefit issues...the answer is yes."
The report also uncovers a private recording of one of the principal backers of the legislation acknowledging the danger to California's environmental laws from Trump appointees at the Federal Energy Regulatory Commission (FERC) under the plan.
"Billionaire investors such as Warren Buffett, energy companies, and Wall Street banks see big profits off power exports to California, including coal power, that a regional power trading market would facilitate," author Liza Tucker wrote. "They see big opportunities in building expensive new transmission lines underwritten largely by Californians to vastly expand a speculative commodities market in which contracts for electricity, whether dirty or clean, are bought and sold like pork bellies.
"But giving up control over California's own power grid threatens new forms of Enron-style market manipulation that led to California's disastrous energy crisis two decades ago, rolling blackouts, shrinking clean energy and efficiency investments, and a tab of some $40 billion to Californians," the report states. "When traders run the casino, the house always wins and consumers are left at great risk."
The report finds:
-- California would no longer run its own electricity market. Legal
challenges and federal preemption over interstate energy pricing could
force California to buy dirty power generated in other coal-heavy states
when the state's three major investor-owned utilities are on track to
generate half their retail sales from green energy sources by 2020, and
today are largely free of coal. The Federal Energy Regulatory
Commission, appointed by President Trump, has the power to dictate the
market's rules.
-- Wall Street would profit at the expense of Californians. Since 2009,
California ratepayers have paid $700 million for losses created via
trading of an obscure financial instrument pegged to California power
transmission rights. A Western regional market will only open up
California to more sophisticated forms of the price-gouging that may
already be occurring in California's electricity market.
-- California ratepayers could represent 70 percent of a regional market's
power demands, depending on how many Western states join. So,
Californians could end up paying the lion's share for
multibillion-dollar transmission lines built in Wyoming, for example, to
facilitate billionaires' wind and coal power exports. These same dollars
could fund renewable energy installations in California that are clean,
local, and enhance the state's energy security.
-- Instead of the current board of directors appointed by California's
governor, regulation and control of a new regional market would fall to
self-appointed energy industry insiders with possible conflicts of
interest, like those that ran California's trading market during
deregulation and turned a blind eye to price manipulation.
-- California utilities could profit by importing cheap, dirty coal power
and trading contracts for fossil-fuel power with distant Western states
from vastly overbuilt gas-fired power plants at the expense of
ratepayers. They could avoid contracting for more renewable energy on
the theory that it will be cheaper to import but with no guarantee that
it will ever materialize.
The report finds that the fixers pushing legislation to create this trading market include:
-- Ralph Cavanagh of NRDC who vouches today for a Western wholesale power
market just as he vouched for Enron and deregulation as a way to bring
public benefits to California and accelerate a shift to renewable energy
and increased efficiency.
-- Dana Williamson, Brown's former cabinet secretary, continues to push for
the legislation, together with Cavanagh. Williamson was director of
public affairs at Pacific Gas & Electric (PG&E) when Governor Brown
appointed her and now runs her own firm. PG&E backed deregulation two
decades ago, filed for bankruptcy during the crisis, and foisted its
collateral damage onto ratepayers. Williamson served as deputy political
director for Gray Davis's re-election campaign in 2001-2002, and then
served as deputy communications director. Davis was recalled in 2003 in
the wake of the energy crisis.
-- Board members of California's current independent system operator that
would be subsumed into running a regional system include energy industry
insiders who have made money off energy markets or businesses and no
rules prevent them from profiting personally off of a Western regional
market. They include energy trader and former CEO of Deutsche Bank's
London global markets division during deregulation, Mark Ferron.
-- Warren Buffett has a vested interest in selling power produced from
dirty coal power plants as owner of PacifiCorp, a giant utility holding
company serving millions of customers in six Western states that
generates two thirds of its power from coal.
-- Would-be green energy barons such as billionaire Philip Anschutz see
California as a way to justify exporting wind and coal power at inflated
prices over new and expensive transmission lines that Californians would
largely underwrite.
-- Don Furman --former lieutenant for Warren Buffett's coal-heavy power
companies-- has peddled a slideshow on the Western power market that is
thin on facts and thick on rhetoric that a Western power market will
lower costs, pollution, and create jobs. In a private tape recorded
phone conference, however, Furman candidly acknowledges that Trump
appointees to FERC will fight to invalidate California laws should the
Western market be created, which would undermine environmental and
consumer protections.
-- The three major investor-owned utilities benefitted from administrative
and legislative favors under Governor Jerry Brown while donating nearly
$10 million together with 23 other energy companies to Brown's
campaigns, pet causes, ballot initiatives, and to the California
Democratic Party between 2009 and 2016. Brown's sister, Kathleen Brown,
sits on Sempra's board and has collected more than $1 million in cash
and stock since 2013 for her work.
SOURCE Consumer Watchdog
