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Bush Opened Door to Enron, but Not to a State in Crisis

January 30, 2002|DIANNE FEINSTEIN | Dianne Feinstein, a U.S. senator from California, is a member of the Senate Energy and Natural Resources Committee.

Although prices for energy in California and the West have mostly returned to normal, the Enron bankruptcy continues to raise questions about the level of influence that energy companies had over the Bush administration during the California energy crisis and the formulation of President Bush's energy policy.

At this time last year, I wrote the first of three letters to the president requesting a meeting to discuss California's dire energy situation. These requests were denied. During this period, however, energy executives had access to senior administration officials, including Vice President Dick Cheney.

On the day I sent my first letter, Jan. 20, 2001, California was experiencing its sixth straight day of Stage 3 energy emergencies, meaning that energy reserves were less than 1.5% above demand. The streak would last 34 days and would involve several economically crippling and life-threatening blackouts.

During this month, the average price for electricity was about 10 times higher than the typical price for energy in January. Natural gas prices in Southern California were six times higher than they were at the same time in 2000.

Meanwhile, energy companies--including ones that would help to craft the administration's energy policy--were reporting earnings for the year. Enron and its affiliates' earnings grew 97% in 2000 from 1999; Duke and its affiliates' earnings were up 226%; Reliant and its affiliates' earnings increased by 166%; and Williams and its affiliates' earnings grew 127%.

Most of these year-end profits were amassed in California, and first-quarter earnings for 2001 would prove to be even more impressive.

I sent a second letter to the White House on March 26 asking to speak with the president directly. Again, the request was denied.

With the onset of spring and reduced natural gas demand, gas prices in California had dropped from the beginning of the month but were still almost 2 1/2 times higher than the rest of the West.

The average cost of electricity for the month was as much as 20 times higher than usual.

By this time the energy crisis had enveloped the West--from the Canadian border to Nevada and from the Pacific Ocean to Montana. In fact, prices for electricity in Oregon and Washington exceeded California's prices on a number of days.

I sent a third letter to Bush on April 19 requesting a meeting. This too was denied.

This was two weeks after Pacific Gas & Electric, California's largest utility, filed the then-largest bankruptcy in U.S. history, and California's second-largest utility, Southern California Edison, was on the verge of insolvency.

It was also two days after Duke announced that its first-quarter income had increased 465% from the year before and three days after Reliant reported that its income grew 202% in the same period from the previous year.

On April 19, natural gas prices still were exorbitantly high. What was striking about this was that prices in April for natural gas and electricity typically reach their lowest levels of the season. In fact, it was not until June 2001 that prices returned to near normal in the natural gas and electricity markets.

Throughout the crisis, I was not allowed a private interview with the president or vice president--even though such a talk may have helped California.

Now we learn that Kenneth Lay, then the chief executive of Enron, had several meetings with Cheney over that same span. He was not the only energy company executive who met with the vice president.

Something is wrong when a senator representing 35 million Californians is not able to talk personally to the president or vice president in the midst of a crisis, but executives from a company that contributed millions of campaign dollars have complete access and significant influence.

We need to enact safeguards to ensure that companies cannot use undue influence to reap extraordinary benefits during a crisis.

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