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The Whistleblower

The Whistleblower #16 - Apr 05, 2002

Cal. PUC Commissioner ordered to step down and pay fine. In a tentative ruling issued by the San Francisco Superior Court, Judge Chiantelli ordered Public Utilities Commissioner Henry Duque to be "excluded from his office and prohibited from performing any further duties as a PUC Commissioner" and to pay a $5,000 fine to the State Treasury for a financial conflict of interest. Mr. Duque held stock in Nextel -- and earned more than $69,000 as a result -- a telecommunications company regulated by the PUC. The suit was filed by The Foundation for Taxpayer and Consumer Rights (the publisher of The Whistleblower), on behalf of the People of California. Visit for more info.

Shut up and pay. One of the biggest items on the PUC's agenda for its meeting yesterday was tucked away at the end of the agenda: the Commission's proposal for PG&E's bankruptcy restructuring, which is due to be filed in bankruptcy court on April 15. Despite this issue's importance for the 4 million consumers in PG&E's service territory, the Commission's deliberations on this matter took place in secret as part of the Commission's executive session. PG&E's parent company made a killing by bankrupting the utility, but the PUC is likely to force ratepayers to pay off PG&E's creditors while the parent company keeps its ill-gotten gains. Nevertheless, those who will be forced to pay for PG&E's schemes have been shut out of the process completely. The commission did not request public input and there have been no public hearings whatsoever on this matter, which is similar to the PUC process that led to a $4 billion bailout of Edison. The PUC is expected to disclose their decision regarding this PG&E bailout Tuesday.

Another energy company, another complex accounting scheme. Enron's use of magical accounting to create imaginary wealth is looking like less of an anomaly and more like business as usual. The Wall Street Journal reports that Dynegy, the energy company that was poised to purchase Enron last winter, created its own special financial vehicle in order to lower its taxes and give its cash flow outlook a face-lift. News that the company's value was inflated by the deceptive deals has investors jumping ship. The fact that Dynegy received the OK from its auditor, Andersen, means next to nothing these days, but some analysts say the scheme -- called "Project Alpha" -- appears to have been legal, but lacking in substantive purpose, indicating, yet again, that accounting laws contain major loopholes that need to be closed.

Market monsters. Mad scientists in the movies, compelled by hubris and perversion, forge unnatural combinations of incompatible substances, and the result is inevitably suffering and destruction. Reality imitates the cinema each time the mad scientists of privatization and deregulation place the brain of a profit-driven market in the body of an essential public resource. California was subjected to this horrifying experiment when deregulation allowed power companies to gouge consumers during the electricity crisis. And the result was similarly disastrous when Enron Corp. attempted to transform another vital public necessity--water--into a commodity. A new Public Citizen report details how Azurix Inc., Enron's water company subsidiary, tried to profit from taking over local water and wastewater operations around the world. Congress and international lending agencies went along with the scheme, pressuring local governments to cede control of H2O services to private companies like Azurix. Azurix's dismal record exemplifies the dangers of deregulation of vital resources; Azurix demanded rate increases in Argentina at the same time the company was peddling foul, brown tap water there. And, in Ontario, the company was charged with several environmental offenses, including discharging raw sewage into a lake. Lawmakers need to get the message that deregulation is dangerous Franken-policy.
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 310-392-0522 xt.309.
2002 FTCR

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