President Bush says the collapse of Enron may contain lessons about protecting workers’ pensions. That’s a good thought, but the president must avoid missing even larger lessons about the dysfunctional state of energy marketing.
Just as Enron employers’ 401(k) accounts were apparently plundered by Enron’s bankruptcy, the pocketbooks of every homeowner and business on the West Coast have been picked through energy deregulation.
Snohomish County PUD residential ratepayers were slammed by rate hikes of more than 50 percent in just nine months. As Public Utility District general manager Paul Elias points out, that was just part of a massive transfer of wealth. The money went from hard-working families and businesses throughout the Pacific Northwest, California and other areas to the Southwest and Wall Street. Count Texas’ Enron as a key originator of this great game or, as it feels here, grand theft.
To their credit, federal agencies and the administration are looking at Enron closely. The Justice Department disclosed Thursday that it has opened a criminal investigation into Enron’s bankruptcy. The Securities and Exchange Commission and the Labor Department have launched civil investigations. In regard to pensions, the president has ordered his economic team to see if changes in pension and 401(k) accounts are warranted.
President Bush also ought to order an independent review of the entire energy deregulation scheme. He should look outside his usual circle for advice, so he doesn’t receive a rehash of last year’s energy policy review, led by Vice President Dick Cheney and influenced by such energy executives as Enron’s Kenneth L. Lay.
If the administration and Congress still have faith in energy deregulation, they better fine-tune the enterprise. First, there’s the obvious matter of speculation — or manipulation — in a service that is essential to the entire functioning of the economy. If the deregulation scheme lacks reasonable price stability, forget about it. Whatever mistakes might have been made by the PUD or regionally in energy planning and purchases, they don’t excuse profiteering of the sort allowed last year by both the departing Clinton administration and the incoming Bush administration.
Then there is the issue of environmental accountability and consumer choice. Some of the rate trouble here stems from four contracts signed in the middle of the Western energy crisis with Enron, American Electric Power, Morgan Stanley and Pacific Corp. With the exception of the Pacific contract, the PUD signed up to receive energy from — wherever. The three contracts don’t specify what plants will produce the electricity, just that energy will be delivered.
That’s such a contrast with more normal practices that alarm bells (which should have gone off at the PUD before signing the deals) ought to sound for anybody who cares about the environment. When power plants can endanger fish or the air, for instance, consumers deserve — at a minimum — to know where their electricity is coming from.
In utilities across the state and nation, consumers have made known their desire for environmental accountability. Aside from the three contracts, the PUD’s power purchases and generation practices can be assessed by anybody who cares. Customers can even pay extra for added use of wind power. To be acceptable, deregulation must be structured to allow consumers and utilities to exercise environmental choices. But industry lawyers have blocked release of even the basic terms of the three contracts. Without information, there’s no hope for consumer choice.
The administration and the country have much more to learn from Enron’s sorry situation.
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