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The Whistleblower

The Whistleblower #10 - Mar 13, 2002

Energy company double dipping likely to get worse with upcoming Cal. PUC decision. California Attorney General Bill Lockyer filed suit against four major power companies -- Mirant, Dynegy, Williams, and Reliant -- and their subsidiaries on Monday, alleging that the firms illegally re-sold power that the companies had already sold to the state's power grid manager under contracts geared to maintain system reliability. Another version of this scheme will likely occur if the state Public Utilities Commission (PUC) allows power companies to execute side deals with big businesses that provide many industrial power consumers with comparatively cheap electricity. Under the PUC plan, these businesses would no longer need the high-priced power for which the state has already contracted, leaving the state stuck with excess power. As a result, California will have to sell that unnecessary electricity back to the profiteering energy firms at a massive loss to the state. The energy companies will then turn around and re-sell this same electricity to the big businesses, profiting off the same electricity twice. And, of course, average consumers pick up the tab for both the high priced power purchases and absorb the loss when the state has to sell the power back, an estimated $8 billion extra charged to residential ratepayers and small businesses. FTCR and other consumer groups are urging the PUC to undo the side agreements, known as "direct access" contracts, as far back as July 1, 2001, which is entirely within the PUC's power. The PUC will vote on this issue on March 21.

US Secretary of Army was "General" of Enron. Army secretary Thomas White, who had been an Enron executive prior to his appointment by President Bush last year, has denied involvement in any of the Enron improprieties. However, Dow Jones Newswires now reports that a number of his former associates say that he was entirely aware of the dubious accounting practices at the company. White says that he never misled investors or stock analysts. But one administrative assistant, who was asked to pretend that she was an energy trader while White and other execs gave Wall Street analysts a tour of the company trading floor, remembers that she and other employees considered White so important to the orchestration of Enron's activities that they called him "the General." FTCR and others have called for the Secretary to testify before a congressional panel about his role in Enron and his knowledge of possible illegalities (WB#4), but so far he has been AWOL.

What is the sound of one hand clapping? Gov. Davis recently complained about his low public ratings on energy issues to the San Diego Union Tribune. In appreciation of his efforts during the energy crisis, he whined, "I think I should at least get a round of applause." Davis, a native of New York, spent much of the energy crisis trying to secure a massive ratepayer bailout of Edison and signing overpriced long-term energy contracts. He will be lucky if he gets a Bronx cheer.

Congress goes after consumers' right to hold corporations accountable. The US House of representatives is scheduled to vote today on H.R. 2341, the so-called Class Action Fairness Act of 2002, which would make it easier for corporations to move class action lawsuits from state court to federal court. Class action efforts have been among the chief tools for consumers to address such problems as unfair credit card charges, automobile defects, unsafe diet products, tobacco risks and many others. That's why big businesses are pushing for this change in the law. They know that consumers who ban together to fight corporate abuse will be in a much weaker legal position in the crowded federal court system, where judges have much less familiarity with the state laws that are relevant to most class action suits. We should not give companies like Enron an option to move class action suits filed in, say, California and Texas courts (where so much of the damage was done) out of the state court system because it expects to have an easier time in federal court. Please call your Representative in DC today and urge them to protect consumer rights by opposing HR 2341.
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The Foundation for Taxpayer and Consumer Rights (FTCR) is a non-profit, non-partisan advocacy organization. For over a decade FTCR and its advocates have exposed and challenged injustices that betray the public trust. The Whistleblower newsletter addresses core issues of the corporate and governmental crises of today and blows the whistle on the brewing fiascos of tomorrow. FTCR does not take a position on candidates for any elected office.
For more information about FTCR's work, to DONATE, to join the fight, or to comment, visit our web site at www.consumerwatchdog.org. 310-392-0522 xt.309.
2002 FTCR


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