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Key Figure in California's Power Crisis Has Bush's Ear
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Bush's solution to California energy crisis? He says, "If there's any environmental regulations that's preventing California from having 100 percent max output, then we need to relax those regulations". And who is he listening to? Kenneth Lay, chairman and CEO of Texas-based Enron Corp. -- See related story below.
Related Story --> Bush refuses to support continued emergency power sales to California
Source: SF Chronicle
Key Figure in California's Power Crisis Has Bush's Ear
Phillip Matier, Andrew Ross Wednesday, January 17, 2001
One powerful name to keep an eye on during this energy crisis is Kenneth Lay, chairman and CEO of Texas-based Enron Corp., and a close buddy and contributor to President-elect George W. Bush.
Enron has been one of the prime movers behind California's energy deregulation and continues to be a significant player in the state as an energy marketer.
And Lay was on hand last week when Gov. Gray Davis met with government regulators and energy providers to try to work out a solution to the state's energy crisis. Billions of dollars are at stake -- and consumers could end up holding the bag.
All this comes amid speculation that Lay will serve as the new president's key adviser on energy policy -- even being described as a "shadow" energy secretary. In fact, Lay had been widely mentioned as the possible energy chief until Bush's recent nomination of Spencer Abraham.
"The governor knows (Lay) has Bush's ear, and we know where he's coming from," says Davis' press secretary, Steve Maviglio.
"He's the head of a billion-dollar corporation that's owed a significant amount of money (from the utilities) -- it's no secret," Maviglio said.
And how about Lay's long political and financial ties to Bush?
For starters, Enron -- which posted revenues of more than $40 billion in 1999 -- was the single largest contributor to Bush's presidential campaign, giving no less than $555,000, according to published reports.
Lay even sent top executives a memo on his personal stationery asking them to contribute $1,000 each to the Bush campaign, says the New York Times.
And according to the Washington-based Center for Responsive Politics, Lay --
along with Enron President Jeffrey Skilling -- each contributed $100,000 to Bush's forthcoming inaugural.
But the Lay-Bush connections run deeper than money.
Lay hired two of Bush's father's Cabinet members and family confidants -- James Baker and Robert Mosbacher -- after they left office.
And just last April, Lay played host to George W. and his dad at the Houston Astros' first home game at the team's new stadium . . . Enron Field.
Three weeks later, according to Tongue Magazine, Lay joined George W. in Washington for a Republican fund-raiser that brought in a staggering $21.3 million, easily the biggest one-night haul for any political party in history.
What's more, the magazine reports, the Bush campaign borrowed Enron's corporate jets eight times last year to fly aides around the country, although the cost of the trips was later reimbursed as required by law.
And what did Enron get out of the deal?
Well, Lay has repeatedly asserted in interviews that there is no quid pro quo in his relationship with Bush.
"Ken Lay and Enron have consistently stood for open access to energy . . . markets," company spokesman Mark Palmer told us yesterday. "What that means is for the marketplace to determine how a scarce resource is allocated."
So it was no surprise when Lay showed up for last week's energy negotiations, first in Washington and then later in Los Angeles, to push the energy marketers' case.
"He's a skilled negotiator," said one source who followed the debate. "He argued for the state to swallow the bitter pill and pony up."
How much money are we talking about?
"Let's just say," says the source, "a calculator doesn't have that many zeros."
STATE OF SHOCK: Last week, Davis was working on his State of the State address -- this week he's got his lawyers working on a possible state of emergency.
"It could range anywhere from an emergency appropriation to buy power to moving to use eminent domain to take over power plants," said spokesman Maviglio.
And that's why lawyers over at the attorney general's office have been going over contingency plans.
It all comes down to this question: At what point is the "public health and safety" at risk?
"Clearly," Maviglio said, "blackouts would set those wheels in motion."
Chronicle columnists Phillip Matier and Andrew Ross can be heard on KGO Radio on Mondays, Wednesdays and Thursdays. Phil Matier can also be seen regularly on KRON-TV. Got a tip? Call them at (415) 777-8815. Their e-mail address is matierandross@sfchronicl
©2001 San Francisco Chronicle Page A15 Chronicle SectionsDatebookCommentaryFoodSportsNewsHomeBusiness
Related Story --> Bush refuses to support continued emergency power sales to California
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