I think Ken Lay courted anyone who would listen as long as that person had government influence,
of course. (LOL) And you think he cooked his goose in Hollywood!!!
Enron's secret bid to save deregulation
PRIVATE MEETING: Chairman
pitches his plan to prominent
Californians
Christian Berthelsen, Scott Winokur, Chronicle Staff Writers
Saturday, May 26, 2001
Energy executive Kenneth Lay, head of
powerful Enron Corp., quietly courted
Arnold Schwarzenegger, Richard
Riordan, Michael Milken and other
luminaries this week in Beverly Hills to
drum up support for his solution to
California's energy crisis.
His prescription called for more rate
increases, an end to state and federal
investigations and less rather than
more regulation.
Lay, a close friend of President Bush
and one of his largest campaign
contributors, hosted a private
90-minute meeting in a conference
room at the Peninsula Hotel in Beverly
Hills on Thursday.
Among the participants were Milken,
the former head of the Drexel
Burnham Lambert investment banking
firm who pleaded guilty to fraud
charges in 1990 and who now runs a
think tank based in Santa Monica;
movie star Schwarzenegger;
and Riordan, the mayor of Los Angeles.
Schwarzenegger and Riordan have
been courted recently as GOP
gubernatorial candidates.
One participant, who agreed to speak
on the condition he not be identified,
said the meeting appeared to be geared
toward getting participants to support
Lay's vision and then champion it to
officials who are trying to solve the
state's energy mess.
PLAN TO RESCUE
DEREGULATION
The source said the timing and tone of
the meeting suggested Lay is
concerned that California will abandon
its disastrous experiment with power
markets by either re-regulating the
system or creating a government
authority to provide electricity. Gov.
Gray Davis signed legislation last week
to create and fund a state power
authority that would build, buy and
run power plants in California.
"They're trying to rescue deregulation,"
the source said of Enron executives.
"They think the whole state power
authority is a bad idea."
At the meeting, Enron representatives
circulated a four-page position paper
titled "Comprehensive Solution for
California," which was obtained by The
Chronicle. It said ratepayers should
bear responsibility for the billions in
debt incurred by the state's public
utilities and that investigations of
power price manipulation and political
rhetoric are making matters worse.
The paper made no mention of the
possibility that much of the runaway
electricity costs in California is due to
market manipulation by power
generators and traders -- a possibility
given credibility in studies by
regulators and economists.
One of the talking points read: "Get
deregulation right this time --
California needs a real electricity
market, not government takeovers."
Another point suggested giving
consumers monetary rebates for
conserving electricity.
INVOLVED IN EARLY DAYS
Lay has been an aggressive champion
of deregulated electricity markets and
was an early advocate in persuading
California to begin its experiment with
a competitive power market system.
Lay has created a new kind of company
in the process, one that essentially
produces nothing but makes money as
a middle-man, buying electricity from
generators and selling it to consumers.
During the first quarter of this year,
Enron's revenues increased 281
percent to $50.1 billion.
Asked about the purpose of the
meeting, Karen Denne, a
spokeswoman for Enron, said she
would "look into that" and then did not
return repeated telephone calls
seeking comment. One participant said
Denne was present at the meeting.
D.C. CONNECTIONS
Meanwhile, Lay's power in Washington
is reported to have reached
unprecedented heights. According to a
story in yesterday's New York Times,
Lay supplied the Bush administration
with a list of candidates for jobs
regulating the power industry and even
interviewed one of them. The story also
said Lay essentially threatened to seek
the removal of the chairman of the
Federal Energy Regulatory
Commission, Curt Hebert, if he does
not support Lay's desire to further
deregulate the nation's electricity
system. Lay denied the allegation.
Also in attendance at this week's
meeting were Bruce Karatz, chief
executive of home builder Kaufman &
Broad; Ray Irani, chief executive of
Occidental Petroleum; and Kevin
Sharer, chief executive of biotech giant
Amgen.
Among those who were invited but did
not attend were former Los Angeles
Lakers star Earvin "Magic" Johnson;
supermarket magnate and Bill Clinton
supporter Ron Burkle; and Dennis
Tito, recently returned from the world's
first civilian space trip.
Milken, through a spokesman,
confirmed that he attended the
meeting, but declined to be
interviewed. Schwarzenegger could not
be reached for comment through a
publicist, and Sharer did not return a
call yesterday afternoon.
A spokesman for Riordan, Peter
Hidalgo, said the Los Angeles mayor
attended,
but was "not intending to formulate
any kind of policy position on this
issue.
His intent is to listen to all sides."
Attached to the Enron handout was a
two-page open letter, addressed to
Davis and the state Legislature,
apparently prepared for those who
support Lay's position and would be
willing to sign their names to it. The
source who participated in the meeting
said those assembled appeared
noncommittal and asked a number of
questions of Lay, but did not agree to
champion his agenda.
E-mail the writers at
cberthelsen@sfchronicle.com and Scott
Winokur at swinokur@sfchronicle.com. |
