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Consumers and the government are still waiting for the grand promises of deregulation to be delivered in Virginia, according to the Richmond Times-Dispatch. Deregulation in Virginia has floundered for seven years.

Electric deregulation is similar to the Medicare bill - those affected by it did not want it. Senior citizens did not want Medicare privatized and made more complex. There was no clamor from the public for energy deregulation. In both cases, politicians and corporate executives, with their own agenda, forced the changes on the citizens. Deregulation and the Medicare drug plan both brought problems and unnecessary complexity to the public.

Some states wisely avoided the problems and complexity of deregulation. In those states, the lights work and electric bills do not double overnight.

In deregulated states, that actually have competition, most customers never bothered to switch utilities. This is proof that the public has no interest in playing bait-and-switch games to try to save a few pennies. Some customers have paid a heavy price for the illusion of saving pennies - in San Diego, rates quadrupled.

The Government Accountability Office (GAO) does a good job of cutting through political bologna. But even the GAO has no magic to save a plan that was flawed from the beginning. You know state deregulation is in trouble if it needs the federal government to "fix it." The GAO said federal efforts to increase competition are dependent on "actions at the state level to bring consumers into the market."

Some take this to mean that the feds want the states to force electric customers into playing the deregulation game, no matter what it costs them. The longer the deregulation game runs, the worse it gets.

In 2011, rate caps will expire in Virginia. Rates will be ultimately determined by the wholesale price of electricity. Energy traders will set the price. Do you think energy traders live to do what is best for the public? Traders look out for traders. That is how some can collect yearly bonuses of millions of dollars.

CBS News reported that when a forest fire shut down a major transmission line into California, an Enron trader sang "Burn, baby, burn. That's a beautiful thing." Enron traders joked about sealing money from "Grandma Millie."

Between energy traders, politicians, and executives deregulated customers are going to get a deal, all right!

Even the temporary capped rates may not be such a good deal. The Virginia attorney general's office reported that more millions of dollars may have been collected under the capped rates than would have been under state regulation!

It's really pathetic. Customers are being forced to pay higher rates to prop up a system that they never wanted! Carnegie Mellon researchers said "Deregulation has become the end rather than the means."

It is very difficult to find any winners in the energy deregulation fiasco. The few that won were energy CEOs and politicians. Energy deregulation paid off for the ones it was designed to benefit. As with all scams, for a few to achieve great wealth, many must suffer.

It's hard to find any consumers who won in the deregulation game in New Jersey, according to the Asbury Park Press. But over five years after deregulation, it easy to find losers. For example, customers of New Jersey Natural Gas Co. will see bills increase nearly 24 percent this winter.

Jersey Central Power & Light Co. has a seven percent rate hike pending. The selling line was that competition would make energy dirt cheap for all. But many utilities refuse to even serve residential customers. Some will sell to homeowners, but only at outrageous rates.

Victor Antonelli decided to try out the competition. Two utilities he called have cut off residential customers. He said "Two of them gave me prices that were so outrageous you would not believe. It was the biggest waste of time."

It seems the competition could not compete. It takes a certain amount of money to produce anything. Prices cannot be cut to zero just because someone made outlandish promises. Consumers lost reliability when the regulated market was destroyed. Customers lost stability and "gained" higher rates.

Bert and Dorothy Kiesel switched to Mxenergy, to save money on natural gas. How did that work out? After getting hit with a bill of $716.57 for their small house, they want out! It is costing them more than if they had never switched. Is it any wonder that most customers never bother to switch utilities? Dorothy Kiesel said. "I don't mind if prices go up, I will pay it, but $700 in a house like mine - it is unbelievable. I am so upset."

The Kiesels were suckered into a bait and switch promotion. The saved seven percent for three months, but then went to a variable rate. The Kiesels said the salesperson told them a different story. The fruit of deregulation is endless mind games and higher prices.

If you live in a state that did not deregulate energy, consider yourself lucky.

Enron founder Kenneth Lay, former CEO Jeffrey Skilling, and former accountant Richard Causey were to be tried together in January, according to the New York Times and the Associated Press.

Lay and Skilling are setting the stage for their defense: In a recent speech, Lay painted himself as a victim and accused the prosecutors of disregarded the truth. This is the same guy who urged employees to buy more Enron stock, while he unloaded his. This is the same guy that said in a speech that Enron was "a strong, profitable, growing company even into the fourth quarter of 2001."

The fourth quarter of 2001 brought bankruptcy for Enron and the wipeout of many employees' retirement savings. To sweeten the deal, for a time, employees could not even transfer out of the imploding Enron stock! Lay faces seven counts of conspiracy and fraud.

Skilling wanted the court to dismiss 10 counts of insider trading and to strike a paragraph from a securities fraud count. He faces 35 counts of fraud, conspiracy, insider trading and lying to auditors

To make things more interesting, former accountant Richard Causey pleaded guilty to a single securities fraud charge on Wednesday. He was facing 30 criminal charges. He entered a plea bargain will get him seven years in prison and he will forfeit $1.25 million. He agreed to help pursue convictions against Lay and Skilling.

Former CFO Andrew Fastow pleaded guilty to two counts of conspiracy in January 2004. He agreed to a ten-year prison sentence and to pay over $23 million. He is also permanently barred as an office or director of a public company. So you don't have to worry about him being recruited to the Duke Energy board when he gets out of the pen.

By the way, Fastow admitted nothing. His wife, former assistant treasurer, received a one-year sentence.

Lay and Skilling have a different tactic. They claim that they don't know anything about any crimes.

Will they continue to pursue the "dumb CEO defense"?

The 'Dumb CEO Defense'

Former Worldcom CEO Bernard Ebbers tried the dumb CEO defense, after orchestrating $11 billion in fraudulent accounting. How did it work out for him? A jury found him guilty of fraud, conspiracy and filing false documents with regulators. The 63 year-old Ebbers was sentenced to 25 years in prison. They will have to find someone else to teach his Sunday school class. He really got off light; the federal prosecutors wanted him in the slammer for 85 years!

These development could not happen to a more deserving guy than Jeffrey Skilling. He is one of the all time arrogant jerks of the universe. During the California energy crisis, Skilling asked "You know what the difference is between the state of California and the Titanic? At least when the Titanic went down, the lights were on." The comment is even more interesting considering the Enron was the company that set up California to fail!

Skilling would insult and intimidate analysts who dared question anything about Enron's supposed business. It will be interesting to see how his overbearing tactics work in the courtroom.

Enron Death Spiral

A Texas bankruptcy judge has ordered 40 former traders to return $20 million in last minute bonuses they received before the collapse. Enron delivered the bonus checks by plane to get them to the traders until the last second!

Enron had no viable business; it was a sham. But which company did former CEO Rick Priory choose as an example for Duke Energy to emulate? None other than Enron! He was overjoyed when Enron collapsed; he wanted to take its place! If Mr. Priory had been as “good” as Ken Lay, he might now be in the same position as him. Sometimes being second banana is not so bad.

The Pension Train

The Chicago Tribune reported that Illinois consumers are about to start feeling the pain from the botched energy deregulation attempt. A few energy CEO's carted off millions of dollars, while their customers will be stuck with higher electric bills for years to come.

The consumer bait was universal: lower electric bills for average citizens. The line was that utilities would be falling all over themselves, competing to provide citizens with cheap electricity. Enron was leading the march to deregulation with such gimmicks as the Enron Girls. These "spokesmodels" toured Illinois selling the illusion of cheap electricity for all.

The final bait was an offer to cut rates for Illinois ratepayers by 20 percent and freeze them for a decade!

The freeze would end in 2007, but the rates would still be cheap from "all that competition."

The freeze will end in 2007, but there's a problem. Rates are expected to spike by as much as 35 percent!

Don't cry to the Enron spokesmodels; they are long gone. The CEO's have also packed their bags (with money) and sailed away.

Politicians racked up contributions from corporations and energy CEO's racked up bonuses. The bill for everything will soon be on its way to consumers.

No utility wanted to compete for residential service; it presented too many problems and not enough money. The citizens never wanted deregulation anyway. It was crammed down their throats by Utility CEO's, politicians, and corporate power buyers.

Enron went down in flames and took electric deregulation with it. Former Duke Energy CEO Rick Priory was envious of a certain energy company. Yes, he suffered from Enron envy. When the deregulated market melted down, it was profits from Duke Energy's regulated utilities that kept the company afloat.

Enron’s Implosion

Westar Energy was fined for channeling contributions to House Majority Leader Tom DeLay and other Republicans, according to the Washington Post. The Federal Election Commission also fined two former corporate officers and the firm's lobbyist.

Westar's 2004 revenue was $178.9 million. The fine of $20,000 is not likely to bankrupt the company. Westar was blatant about what it expected to get in return for its Republican campaign contributions. A clause was added to a bill to protect Westar from any financial damage resulting from the bill.

When Westar was investigated by a grand jury, Tom Delay and company fell all over themselves, removing the Westar clause from the bill.

Lobbyist Richard Bornemann of Governmental Strategies Inc., was fined $5,000.

Westar chief executive David Wittig and former chief strategic officer Douglas Lake are facing 40 counts of wire fraud, money laundering, and circumventing internal controls. The prosecutors said the two executives looted the utility of millions of dollars through stock options, inflated salaries, personal use of company planes, and attempting to control the company's nonregulated businesses.

Wittig was another utility CEO who was going to make it big by chasing the deregulation bubble.

'The Enron of the Midwest'

Texans were promised that deregulation would bring lower power bills. But the ratepayers in Houston and Dallas may actually get higher power bills, according to a study by University of Texas professor Jay Zarnikau.

Residential customers in deregulated markets paid an average of 22 percent more per kilowatt-hour in October 2004 than in December 2001.

It was not the customers who pushed the deregulation laws; it was energy executives and politicians. Most did not want things more complicated, on the outside chance of saving a few pennies.

Ratepayers were promised low electric rates if only they would submit to deregulation. But the fruit of deregulation has proven to be bitter. Some customers actually face higher rates after the artificial sucker rates expire. Some utilities use deregulation to invent new ways to gouge their customers.

The deregulated "free" market often means that utilities are free to gouge ratepayers with impunity. In Texas, Donald Lucas received a shocking surprise from TXU Corp., according the Wall Street Journal. His power was abruptly shut off by TXU. He did not even know that TXU was his electricity supplier. Mr. Lucas said that he was told that his former supplier dropped him for failing to pay on time. No notice about the late payment or transfer was sent.

After the power was turned off, TXU demanded fees to turn it back on: $164.99 that was past due, $270 for a deposit, $8 disconnect fee, $89 reconnect fee, $5.29 transfer fee, $3.38 "base customer" fee, and taxes. The company has raised electricity rates 33% since 2002.

TXU has been fined or reprimanded by state officials several times for pushing new marketing strategies too far. TXU was forced to curtail misleading advertising and charging varying rates to different customers. TXU disconnects about 105,000 Texans every month.

CEO C. John Wilder said "We're not bashful about what we're trying to do. What you're seeing is us learning ."

TXU is learning how to extract the maximum amount of rates and fees from customers, all with the blessings of deregulation.

Yesterday, The Patriot-News published "Utility aims to replenish much older work force." If the older workforce is to be replenished, older workers will be laid off and more older workers hired. However, if the older employees were replaced with younger people, the older workforce would no longer exists.

How do utilities get by with this without violating age discrimination laws? Often by claiming any reason for the layoffs, other than age. Deny, deny, deny.

The Pennsylvania utilities had big layoffs in the mid-1990's. As those with less seniority were laid off, the workforce instantly aged. Now it is another decade older.

FirstEnergy said it is going to hire 3,000 people over the next three years. But what if older candidates apply for the jobs? Just hire the young people and deny, deny, deny.

The ill fated deregulation of electric utilities contributed to a host of problems; this is just one more. Deregulation caused utilities to get more stingy with everything. Training stopped, apprenticeship programs were discontinues, and no money was spent on hiring.

Michael Love, president of the Energy Association of Pennsylvania, said "It is an issue the country faces. In my experience, regardless of a deregulated environment or not, the pressure to keep energy costs down has led to this issue coming to the forefront."

There was a time when employees retired at age 55. Many corporations have been converting pension plans to cheap cash balance plans and taking away retirement health benefits. Now the suits cannot understand why so few people are retiring. As usual, most corporations make their own problems. Everything has a price, even greed.

Age Discrimination by Any Other Name

Feb. 24, 2005

Duke Energy and PG&E face major - possibly insurmountable - hurdles in implementing a just-announced contract for sale of electricity from the Duke-owned, non-operating Morro Bay Power Plant to PG&E, including new demands by the City of Morro Bay for up to $10 million a year to extend a critical lease of waterfront public property to discharge heated cooling water from the 50-year-old plant.

The City contends the plant cannot operate without the lease, which expired on Nov. 14 and has been the subject of protracted negotiations between Duke and the City. Duke has run the plant several time since the lease expired, and the City has threatened to evict Duke from use of the outfall located on state tidelands administered by the City.

Despite optimistic assumptions expressed in press releases by Duke and PG&E as well as a media report (San Luis Obispo County Tribune) that said the contract "will" keep the plant open, the two energy companies are confronted by these obstacles:

1. The City has rejected Duke's offers for the terms of a new outfall lease, and in a letter from the City to Duke dated Feb. 22, the City said the fair market value of a new lease would be between $3.3 million and $10.8 million a year, far beyond what Duke has proposed to pay. Duke first offered $100,000 a year and later $250,000 a year for three years with a 30-day escape clause. The City also insists that Duke guarantee in a new lease that the existing plant would be removed at some point in the future. Cost of that demolition has been estimated at between $30 to $40 million.

2. Duke's federal discharge permit to operate the plant has expired. The permit allowed the plant to withdraw water from the Morro Bay National Estuary for cooling purposes and release the heated water in a concrete channel next to Morro Rock. Called a National Pollution Discharge Elimination System (NPDES) permit, it has been extended administratively by the Central Coast Regional Water Quality Control Board for 10 years while the Board and the California Energy Commission reviewed Duke's applications to replace the existing plant with a new one. But in filing those applications, Duke was required under the U.S. Clean Water Act to conduct a scientific study of the effects of the water withdrawal, which found that between 17% and 33% of the fish and crab larvae in the Estuary would be destroyed, representing a significant adverse impact that Duke is required to remedy either by installing dry cooling, which uses no sea water, or paying money to offset the impacts. Duke has proposed paying about $12 million to fund a Habitat Enhancement Program to compensate for the toll taken on marine life, although whether it would be effective is in great dispute. The regulators have not decided what steps must be taken to address the impacts, if Duke is allowed to build a new plant. But Duke has stated publicly that it is not certain whether or when it may go forward with a new plant and even that it would be willing to sell the plant. In Duke does not pursue the permit, the board could require Duke to apply for a new permit for the existing plant, which would entail reports and hearings to determine whether Duke could comply with new Environmental Protection Agency regulations covering operation of existing plants adopted last summer.

3. The contract must be approved by the California Public Utilities Commission, which regulates utilities such as PG&E. Whether PUC rules would allow approval of a contract involving an aging plant that has a significant adverse impact on marine life in a national estuary has not been determined. PUC rules allow for the public to file protests against such a contract, which, depending on the arguments submitted, could lead to public hearings. Duke filed a notice with the PUC on Wednesday, seeking approval of the three-year contract by April 4.

   The letter to the PUC asked the agency to find the contract "reasonable and prudent for all purposes" and stated that the costs of the contract would be charged to its ratepayers. The contract "provides PG&E an opportunity to secure a resource to meet its capacity and energy needs" for 2005-2007. Its press release said the contract would help PG&E meet peak energy demands during summer heat spells.

4. Although PG&E said the contract is designed "to insure adequate generating capacity in northern and central California," no mention was made of the fact that recent forecasts have identified Southern California as the region that is mostly likely to experience shortages of electricity. According to an energy expert in Sacramento, electricity from the Morro Bay plant "will not help Southern California one bit" because of lack of southbound space on the main north-south "grid" transmission lines in the San Joaquin Valley, to which PG&E lines would transmit power from the Morro Bay plant by way of a PG&E switching station adjacent to the plant.

5. An air quality permit was approved by the Air Pollution Control District several years ago during a review of Duke's plans for the new plant, but it expires this year since construction of the plant has not started. Duke will be required to undergo a new Best Available Control Technology (BACT) review, and the APCD will decide what kind of emissions controls will be required now. The plant's operations already are limited by the amount of emissions it can release, since Duke is unwilling to spend millions to improve the control technology. Duke has chosen to limit operations instead. Whether these limitations could affect the operating levels of the plant under the contract was not mentioned.

In its press release, PG&E envisioned the two operational units running at maximum capacity of 325 megawatts each (two older units have been mothballed), but whether that is possible given the inefficiency and therefore high operating cost of the units and the air emissions limitations was not addressed.

CAPE is a nonprofit citizens group that has been an official intervenor in the Energy Commission's four-and-a-half-year review of the Duke application to build a new plant. CAPE's goal is make sure that if a new plant is built, adequate environmental and public health protections are required. It is opposed to a new lease, either short or long term, because of the severe damage that water withdrawal from the Estuary causes. CAPE supports dry cooling at the proposed new plant, along with the Energy Commission's professional staff and the California Coastal Commission. More information is available about CAPE at www.plantexpansion.org.

Duke and Morro Bay Break Off Negotiations

Electric deregulation is not working as promised in Texas, according to The Dallas Morning News. Ratepayers were promised lower prices for electricity. Three years later, it is seen that the promise was only the bait.

Carol Biedrzycki, executive director of the Texas Ratepayers' Organization to Save Energy, said "Rates are artificially high...It's not good for the economy."

Tim Morstad, Consumers Union analyst, said "The current electricity-pricing scheme results in millions of residential customers paying above-market rates."

Many people fell for the electric deregulation scam. They were told that competition would drive down the cost. Only now are some customers finding out that deregulation is driving the cost of electricity up.

The Dallas Business Journal reported that medium-sized businesses in Texas are experiencing deregulation sticker shock. Rates have climbed over 30 percent for some customers.

Residential customers are still semi-regulated. Large users have negotiated wholesale supplies of electricity. Medium-sized businesses are left holding the deregulation bag.

These businesses were give the standard sucker rates for a year or two. But guess what? The sucker rates always run out. Then what? They get to pay through the nose for deregulated power.

Stan Choe reported in The Charlotte Observer that Duke Energy has still not settled all of the lawsuits against it. Even though Duke has a new chairman/CEO, the lawsuits will not instantly disappear. It could take some time for these suits to be settled. Just as it will take some time to work off all the debt incurred by previous management. Time will be needed to unload all the losing ventures also.

The Federal Energy Regulatory Commission concluded that Duke overcharged on energy contracts. Duke could not get out of paying. The negotiations were only for how much Duke would have to pay.

Duke is still facing a San Francisco grand jury. There are several round-trip trading lawsuits that have not been settled. Duke did manage to escape some of these lawsuits, but there are more in the wings. Duke used an interesting defense for some of the round trip trading lawsuits, last year.

There was too much evidence to use the old standby of denying everything. So, Duke did not deny engaging in round-trip trading. Duke just said that it did not do much of it. It worked; the courts bought it and dismissed the charges in several cases! Time will tell if Duke can pull it off again.

Duke Dodges Another Bullet

Duke’s $207.5 Million Price-Manipulation Settlement

For anyone still having trouble accepting that the West Coast energy market was manipulated in 2000/2001, hard evidence has been released, according to the Seattle Times. There are tapes of energy traders boasting of manipulating the market. They discussed the methods used to rip-off California "grandmothers." Withholding energy was one manipulation tactic discussed. Buying energy, rerouting it, and selling it back to the same company at a higher price was another scam that was discussed.

Such evidence is as hard to deny as the photos of Iraqi prisoners being abused under the Bush occupation regime. The knee jerk reaction of "deny, deny, deny" is hard to pull off in the face of hard evidence. Plan "B" is always the "few bad apples" plea.

The Snohomish County Public Utility District obtained tape transcripts from the government. It is now seeking restitution from Enron. Enron was the ring leader, but it was not the only energy company to gouge the people of California. And, Enron was not the only company to deny everything.

Other energy companies were lusting after the windfall profits that Enron was claiming. No one questioned if the Enron tactics were legal. Maybe the other corporations did not care about legalities, as long as they could get their hands in the cookie jar.

One energy CEO went so far as to hold Enron up to employees as a role model! This person was Rick Priory, former Chairman and CEO of Duke Energy. Mr. Priory tied his future to the Enron star. The star imploded and became a black hole, sucking in those foolish enough to orbit it.

Some former traders are facing trial. Some have already pleaded guilty to wire fraud. Some of the companies that wanted to be like Enron suffered bankruptcy. Other companies flirted with it.

Rep. Jay Inslee said "These tapes are very accurate, obscene descriptions of what (Enron) did. I expect to get a vote on the amendment because I can't understand how you can listen to these tapes and allow citizens to be gouged."

California Sen. Joe Dunn said "(FERC officials) like to wave around the $3 billion (refund) figure, but it is in essence pennies on the dollar that California is owed in this type of behavior recorded on these tapes. We ought to be talking about $40 billion."

In 2002, the Associated Press reported that trades by Duke Energy were mentioned by traders caught on tape: "In another transcript in Xcel's release, two people discuss how Duke Energy Corp. and Oklahoma-based Williams Cos. Inc. routinely overscheduled their loads to create congestion."

Trading Comments Seep Out

This year, two former Duke Energy executives were indicted on 18-counts, including: racketeering conspiracy, wire and mail fraud, money laundering and falsifying corporate books.

Duke Executives Indicted for Fraud

New Duke CEO and Chairman Paul Anderson has washed his hands of speculative energy trading. In a recent open forum, Mr. Anderson commented on the huge bonuses that Duke paid to the two indited executives and one trader. He said "We must remember that was a different era at Duke Energy - one that will not be repeated."

Open Forum - May 2004

The Washington Post reported that ratepayers in Maryland are due for some shocking electricity bills in August. Customers will begin to pay the price for deregulation rules implemented in 2000. Prices will jump from 30 to 50 percent.

Bruce R. Oliver, energy consultant, said "Very few of them are aware this is coming at them. Some will really be clobbered."

Jeff Skilling was once the high-riding, wheeling-dealing CEO of Enron. Now he is babbling in the loony bin, according to Reuters.

On Friday, Skilling "lost it" in a New York City bar. Police picked him up at 4 a. m. EDT, after responding to a call about an emotionally disturbed person.

Detective Thomas Kuchma said "He was acting erratically, taken into custody and then removed to a New York hospital for evaluation because of his erratic behavior."

One source said "EMS determined that he was intoxicated, irrational and possibly suffering from paranoid delusions, due to the fact that he was pulling open people's clothes and looking for recording devices, accusing them of being FBI agents and stalking him."

The Associated Press earlier reported that Skilling had visited other bars, where he allegedly pulled open customers' clothes, looking for recording devices, and accused them of being FBI agents.

Enron Death Spiral

The people of Michigan are realizing what a failure electric deregulation really is, according to The Daily Oakland Press. DTE Energy is leading a coalition to put deregulation out of its misery.

Citizens for Long-term Energy Affordability and Reliability (CLEAR) has members from labor unions, the Southfield-based Associated Food Dealers of Michigan, and DTE Energy Shareholders United.

Citizens are staying away from deregulation in droves. In four years, only 60 customers have moved to alternative energy providers in Michigan!

Roger Martin, coalition's coordinator, said "If you consider that there are 3.7 million residences in Michigan, and 500,000 businesses in Michigan, it's not a lot," he said. "It's clear that (the law) is not working for all of Michigan."

It’s the same scam. Rates are kept artificially low for a period of time, to sucker the people in. Then rates are free to soar to the stratosphere. When the "sucker rates" come off, increases of between 20 percent and 30 percent are expected. Many people want to kill the deregulation monster, before it kills them financially.