Wrong on Deregulation, Wrong on Prop 7
One of the fascinating aspects of unraveling the No on 7 campaign has been the recurring connection between the characters who fought for and then defended a deregulated electricity market in CA – that ultimately led to an energy crisis and rolling black outs - and the characters who oppose Prop 7 today.
I’ve detailed extensively on how the Natural Resources Defense Council played a critical role in getting environmentalists to support deregulation on behalf of Enron. Also in the crusade was one Jan Smutny-Jones. Jan has been at the vanguard of defeating Proposition 7, signing the ballot arguments, appearing before the joint senate/assembly hearing to testify against Prop 7, and even serving as the plaintiff’s (unsuccessful) lawyer to get certain language off the Prop 7 proponent’s ballot argument. Interestingly, Smutny-Jones was also the chairman of the board that oversaw the electricity grid when California’s rolling black outs were going on.
This might explain Smutny-Jones’ activities during the Big Utilities’ efforts to deregulate electricity in CA.While NRDC’s Ralph Cavanagh was expressing his admiration for Enron’s “environmental stewardship,” Jan Smutney-Jones had these things to say:
“Edison spokesman Steve Hansen and trade-group executive Jan Smutny-Jones said the 1996 law can deliver the benefits promised, but not yet delivered, if it is given more time and state authorities fine-tune it -- for instance, by allowing for more long-term power contracting.”
While investigating this summer's stunning spike in electricity prices, state authorities have heard stories about a curious phenomenon: On days when the weather is hot, batches of power generated in California are sold to other states. A little later in the day, similar amounts of power are sold back to California -- but at much higher prices. The question is, is it the same power? If so, that could be "megawatt laundering" -- a multi-company conspiracy to evade California's wholesale price cap, which covers power generated in California but not power sold into California from elsewhere.
Worried that such transactions could be costing consumers millions of dollars, several energy specialists raised concerns about megawatt laundering during a Federal Energy Regulatory Commission hearing a month ago in San Diego. But an unconfirmed news report last week said the federal agency had concluded that generators had not abused the market. And others say concerns about megawatt laundering are exaggerated.
Among them is Jan Smutny-Jones, executive director of the Independent Energy Producers Association, a power-firm trade group, and chairman of the Independent System Operator, which oversees most of California's power grid.
Smutny-Jones dismisses the possibility of market manipulation:
"This is one of those things that's turning into an urban legend," he said. "I don't want to characterize this as a significant problem."
The “urban legend” of course, turned into a criminal trial and became the topic of a documentary called “The Smartest Guys in the Room.” Tapes of traders plotting to rip off Californians made its way both into Senate hearings and the documentary (warning – there is profanity):
Why would Smutny-Jones stick his neck out so far to defend electricity deregulation, even in the face of a crisis? Maybe it’s because
“During the depths of the energy crisis in 2000, California's electricity grid was controlled by a 26-member board composed of stakeholders, including representatives of power companies, utilities, businesses and consumers. The board was headed by Jan Smutny-Jones, executive director of the Independent Energy Producers Association, whose members, including Duke Energy Corp. and Dynegy Inc., piled up enormous profits during the state's energy crisis."
Oh now I see. Jan Smutny-Jones had to pretend there was no energy crisis because he was the chairman of the board that oversaw CA’s electric grid during the rolling black outs and, coincidentally, was profiting handsomely from it. Fascinating.
"Davis blamed that board for causing the energy crisis, saying its decision to lift price caps in December 2000 allowed energy companies to charge astronomical prices for energy, which devastated the state's major utilities and still led to blackouts."
Read the whole article here.
So, NRDC and Jan Smutny-Jones want you to trust them on energy policy, when they vigorously defended the deregulation scheme and played active rolls in causing it.
These guys were dead wrong before, and they are dead wrong again.