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Enron and Clinton's Socialization of American Energy
Banner of Liberty ^ | January 21, 2002 | Mary Mostert

Posted on 01/23/2002 7:02:34 AM PST by Stand Watch Listen

The bankruptcy of Two of America's Largest Energy Companies in 8 Months

In all the charges and countercharges, accusations of fraud and name-calling that is going on about the bankruptcy of Enron, it puzzles me that almost no one in the media is talking about the fact that it is the SECOND major American power company to declare bankruptcy recently.

Pacific Gas and Electric in California, which employed 18,400 people and provided electric power to 4.5 million people filed for bankruptcy on April 2, 2001. Enron, which buys power on the supposedly "deregulated" market and sells it, has fewer transmission lines and energy producing assets in America than P.G. & E, declared bankruptcy on December 2, 2001, exactly eight months later. Enron had 21,000 employees.

We read and hear a lot of news from employees of Enron about having lost as much as a million dollars each on their Enron stock. What they really mean is, had they sold their stock, which was trading at less than $10 a share in 1992, after it had skyrocketed to a whopping $90 a share during the Clinton Administration that's what it would have been worth.

Most articles blame deregulation for the mess. Only, they rarely mention that the real problem in California, for example, was the FAILURE to actually deregulate. The so-called deregulation forced companies such as PG&E to sell their power producing assets. I lived in the Sierra foothills when some of those sales took place, due to deregulation. PG&E owned several small electric producing dams in the Sierra Mountains in El Dorado County. Under deregulation, they had to "sell" those assets.

PG&E was required by the the California Public Utility Commission(CPUC), to sell their power producing assets. Why? According to the socialist views of the U.S. Department of Energy in the Clinton Administration, "The California PUC is also charged with ensuring that the deregulated electric power system will continue to run reliably and that no generator will be able to exercise market power. The distribution of PG&E's assets among three buyers satisfied the goal of mitigating market power." (see Case 2 - Pacific Gas and Electric Company - Auction Process)

In other words, the deregulation PROCESS was set up to eliminate competition from arising among power producers. First the politicians froze the price the energy companies could sell their product to the consumer for. Next they, Democrats and Republicans, stripped the power companies of their market power by forcing them to sell their energy producing assets. Then, a new middleman was created, Enron, which could buy the energy from many sources and sell at pretty much a monopolistic price based on demand from the consumer. Since the consumer's cost was fixed, he or she had no incentive to conserve energy, although conservation was touted as a good thing.

This would be similar to fixing the price at the gas pump at, say 75 cents a gallon, while allowing the company selling the gasoline to the service station to charge the service station whatever he could get. If the service station had to sell the gas to you at 75cents a gallon, but had to pay $1 a gallon wholesale for it, don't you imagine the service station would just close down? Of course!

So, why didn't PG&E just close down? They were forced, by law, to continue to sell to the consumer, even though they were buying the power from Enron for more than they could sell it for.

What appears to have been going on in the energy sector for the past several years, after the Clintons failed to push through their plan to socialize medicine, was to develop a plan that in effect has attempted to socialize energy production. After the Democrat Governor of California, Gray Davis, made sure that PG&E lost billions of dollars, he now is demanding that PG&E sell the state its transmission lines. Of course, Davis is only willing to pay $6 billion to $8 billion and the State's refusal to allow PG&E to raise its rates when wholesale prices skyrocketed created $12 billion in debts for the energy company.

The Clinton administration's 1999 "Comprehensive Electricity Competition Act" did not insure competition, but, in the opinion of the Edison Electric Institute (EEI) it "In many respects, this bill amounts to regulation, not deregulation..."

That regulation is a major factor in the bankruptcy of both PG&E and Enron. Enron was a highly speculative venture which depended heavily on legislation being passed that would favor Enron's middleman position in delivering electricity to the consumer and help from the White House on its overseas ventures. The overseas ventures have not been profitable, and the skyrocketing price of wholesale electricity suddenly began to drop - partly because of the weather.

Those who were speculating and certain that putting all their available funds in the Enron basket now want the rest of us to do something to help them.

I wonder how many of those now complaining were planning on sharing their millions with the rest of us had they sold their stock at the top of the market?

To comment: mmostert@bannerofliberty.com



TOPICS: News/Current Events
KEYWORDS: calpowercrisis; calpowergate; enronlist

1 posted on 01/23/2002 7:02:34 AM PST by Stand Watch Listen
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To: Enron_List
indexing
2 posted on 01/23/2002 7:03:05 AM PST by Stand Watch Listen
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To: Stand Watch Listen
"Enron, which buys power on the supposedly "deregulated" market and sells it, has fewer transmission lines and energy producing assets in America than P.G. & E, declared bankruptcy on December 2, 2001"

Two thousand and WHAT??

3 posted on 01/23/2002 7:07:46 AM PST by cake_crumb
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To: Stand Watch Listen
If the CA power fiasco was enough to bankrupt Enron then the company must have been on pretty shaky ground to begin with.
4 posted on 01/23/2002 7:37:31 AM PST by 74dodgedart
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To: *calpowercrisis;*calpowergate;Ernest_at_the_Beach;Stand Watch Listen;
Bump List
5 posted on 01/23/2002 7:53:10 AM PST by Libertarianize the GOP
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To: 74dodgedart
The California power crisis had nothing to do with why Enron went bankrupt. As the middleman for power sales, they made money whether the price of power was going up or going down. It made no difference to them.

True, California still owes them some money, but it's insignificant to what happened to that company.

6 posted on 01/23/2002 7:56:31 AM PST by Dog Gone
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To: Dog Gone
As the middleman for power sales, they made money whether the price of power was going up or going down.

Do you mind giving us economics challenged folks an explanation of that? A couple of examples will suffice. Keep in mind that the sales price to the consumer was fixed and that many of the steps normally in play in a free market were frozen by law.

7 posted on 01/23/2002 8:19:56 AM PST by Mind-numbed Robot
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To: Stand Watch Listen;randita;SierraWasp; Carry_Okie; okie01; socal_parrot; snopercod; quimby...
That is an interesting website ( Banner of Liberty )!

Link to the home page:

Banner of Liberty Home Page

To find all articles tagged or indexed using calpowercrisis

Click here: calpowercrisis

8 posted on 01/23/2002 10:21:17 AM PST by Ernest_at_the_Beach
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To find all articles tagged or indexed using Enron_List, click below:
  click here >>> Enron_List <<< click here  
(To view all FR Bump Lists, click here)


9 posted on 01/23/2002 10:22:06 AM PST by Ernest_at_the_Beach
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To: Ernest_at_the_Beach
That is an interesting website ( Banner of Liberty )!

I've been posting from the site Banner of Liberty / Original Sources since 1998. The author, Mary Mostert, now only sets forth a weekly column.

10 posted on 01/23/2002 11:11:20 AM PST by Stand Watch Listen
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To: Stand Watch Listen
I don't usually go look at sources but I liked that enough I looked and ---well I guess I am slow because it has some good stuff!

And this article states what so many of us following the Calpowercrisis believe so very well!

11 posted on 01/23/2002 11:26:43 AM PST by Ernest_at_the_Beach
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To: Mind-numbed Robot
Consumer prices were fixed, but wholesale prices were not. At times there were maximum caps imposed, but the price Cal ISO paid for power fluctuated all the time. Enron wasn't producing any of the power it sold; it was merely serving as the market wholesale distributor.

In essence, they were paid for providing a service, and the price per megawatt didn't matter.

12 posted on 01/23/2002 11:43:48 AM PST by Dog Gone
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To: 74dodgedart; Ernest_at_the_Beach
A lot of PNW publicly owned (municipal, city, County PUD) electric utilities, were told by the rating agencies in the winder of 2000-1 that they needed to immediately and significantly (i.e. over 20%) raise their electric retail rates in Washington and Oregon or the credit rating agencies would downgrade the credit rating of the electric utilities. That is why in the Washington and Oregon so many electric utilties raised rates to consumers anywhere from 20 to about 90% (over a year ago) blaming it on record droughts and the California power crisis.

Those rates are still in place for the most part, and people up here in Washington state remember Gov. Davis saying that he would not allow a 10% rate increase by PG&E to help keep it from bankrupcy.

And people wonder why folks up in Washington with their higher electric bills, have zero sympathy for the mismanagement caused current problems in the state of California?????

13 posted on 01/23/2002 12:42:45 PM PST by Robert357
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To: Robert357
They need to come down here and vote against Davis!
14 posted on 01/23/2002 12:50:15 PM PST by Ernest_at_the_Beach
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To: Dog Gone
I just indexed an article where from a Cape Cod pub where they blamed Enron for the California Power Crisis also. Looks like there is a campaign to connect the Enron mess as responsible for the Davis mess!
15 posted on 01/23/2002 12:52:36 PM PST by Ernest_at_the_Beach
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To: Ernest_at_the_Beach
Yeah, that was such a crappy article that I'm not going to bump it. The reporter basically took a Ralph Nader press release and called it a news story.
16 posted on 01/23/2002 1:15:13 PM PST by Dog Gone
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To: Ernest_at_the_Beach
Reminds me of when I went to register to vote in SF. I asked if I could register as an Independent. The person said sure, Independent Socialist Workers Party. I said no. I then said, what party was the Mayor Alioto (sp)? The register smiled and said Democrat. I said great, register me as a democrat so I can vote against the mayor in the next primary! She didn't look happy!
17 posted on 01/23/2002 1:18:48 PM PST by Robert357
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