Power Play: The Biggest Game in Town

The little-noted push to deregulate utilities will drive up rates and jeopardize service--not to mention

This reference to "overseas" plants is highly pertinent. As Cavanagh palavers amiably with Southern California Edison about storm windows, the company is taking its cut of the $28 billion and investing a portion of it in filthy coal-fired plants in Indonesia, China, and Australia. PG&E, through its subsidiary U.S. Generating Company, has made similar investments in the Far East.

NRDC regularly issues a yearly rating of the "best" utilities in the country, based solely on an analysis of their carbon emissions in the state where they are headquartered. Southern California Edison and PG&E have consistently ranked in NRDC's top five despite their hostility toward renewable, their dependence on nuclear power, and their filthy overseas plants. In a full-page ad taken out in the San Francisco Chronicle by PG&E, Ralph Cavanagh effused: "PG&E programs benefit every sector of the economy. The farmer, the factory owner, or the family of four can save money and improve the environment through PG&E's various energy efficiency efforts."

There are not only ideological but also personal ties involved here. John Bryson, CEO of Southern California Edison, is one of the founders of the Natural Resources Defense Council. NRDC is not the only environmental group with such connections. AES Corporation is one of the nation's largest independent power producers. Its CEO, Roger Sant, serves as the chairman of the board of the World Wildlife Fund, a group that also touts the virtues of deregulation.

This confluence of interests is expressed politically in the Energy Foundation, a group based in San Francisco. The foundation was created in the late 1980s by three of the largest foundations in the country: Rockefeller, MacArthur, and Pew. Its goal is to promote green capitalism on energy issues by doling out $17 million a year to a variety of environmental groups and consumer alliances pushing for low energy costs for poor and moderate-income folk. These alliances are well aware that as deregulation rolls forward there will be no guaranteed service, and no regulatory structure to advocate and protect it.

In the words of Pam Marshall of the EnergyCENTS coalition in Minneapolis, "Industries that provide energy for basic human survival, such as heating and cooling, ought to be overseen by a body whose duty it is to maintain those services for everyone and to ensure against the public harm that energy tragedies can cause." Marshall says that over 100,000 Minnesota households may be at risk of losing their heating if the deregulation forces triumph.

But many groups that might have been expected to make such arguments have fallen strangely silent. The reason seems simple: They have been blessed with dispensations from the Energy Foundation. According to Eugene Coyle, who once worked for a Bay Area group called TURN (Toward Utility Rate Normalization), "The Energy Foundation has threatened to strip funding from groups that have opposed its deal-making with the utilities."

Indeed, Daniel Berman brusquely terms the Energy Foundation "a money-laundering operation," a charge that seems well-deserved. Rockefeller and Pew--both with endowments deriving from oil--fund another foundation that duly remits large sums to groups such as Cavanagh's NRDC, which then advocates exactly the policies desired by the big energy companies. Since 1990, NRDC has received more than $2 million from the Energy Foundation, and has been able to direct the flow of millions more to groups that will parrot the NRDC energy line.

In the final episode of our story, the trail now heads back to Enron. Back in July, Enron announced its planned takeover of Portland General Electric, as part of its plan to bolster its holdings in preparation for federal deregulation of the electric utilities. Rather than challenging the takeover with the Federal Trade Commission on anti-trust grounds, a coalition of "public interest" groups came out in favor of the merger, citing Enron's sensitivity toward environmental and rate-payer issues. This came as something of a shock to many environmentalists in the Northwest, who note that Enron has lavishly funded attacks on the Endangered Species Act and that its CEO, Kenneth Lay, served as chair of the abortive Phil Gramm presidential campaign.

We have a copy of the Memorandum of Understanding signed by Enron and 13 conservation and community organizations, headlined by the NRDC. It was proudly faxed to us by Enron. In exchange for testifying before the Public Utility Commission and the Federal Energy Regulatory Commission in favor of the merger (their travel expenses generously picked up by Enron), the groups will receive a variety of pecuniary rewards. For example, the Northwest Environmental Advocates will receive $30,000 from Enron for its Riverwatch program. The Native Fish Society will receive $20,000 for its hatchery-reform campaign. Oregon Trout's Salmon Watch program will rake in $15,000. The 13 groups as a whole receive $75,000 to hire someone to testify at the Public Utility Commission hearings on the economics of the merger. Larger slices of the pie are going to big enviro-corporate players such as the Nature Conservancy. Ralph Cavanagh showed up at the press conference announcing the deal, and exulted that the Enron merger with Portland General Electric "is a national model for the industry."

A $500 billion bailout and an alliance stretching from Enron in Houston to NRDC in New York City to the Energy Foundation in San Francisco: It's one of the biggest stories of the 1990s, but those Super Bowl commercials are about the most you'll ever hear about it.

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