Power Outage Traced To Dim Bulb In White House

I can tell you all about the ne'er-do-wells that put out our lights tonight. I came up against these characters -- the Niagara Mohawk Power Company -- some years back. You see, before I was a journalist, I worked for a living, as an investigator of corporate racketeers. In the 1980s, "NiMo" built a nuclear plant, Nine Mile Point, a brutally costly piece of hot junk for which NiMo and its partner companies charged billions to New York State's electricity ratepayers.

To pull off this grand theft by kilowatt, the NiMo-led consortium fabricated cost and schedule reports, then performed a Harry Potter job on the account books. In 1988, I showed a jury a memo from an executive from one partner, Long Island Lighting, giving a lesson to a NiMo honcho on how to lie to government regulators. The jury ordered LILCO to pay $4.3 billion and, ultimately, put them out of business.

And that's why, if you're in the Northeast, you're reading this by candlelight tonight. Here's what happened. After LILCO was hammered by the law, after government regulators slammed Niagara Mohawk and dozens of other book-cooking, document-doctoring utility companies all over America with fines and penalties totaling in the tens of billions of dollars, the industry leaders got together to swear never to break the regulations again. Their plan was not to follow the rules, but to ELIMINATE the rules. They called it "deregulation."

It was like a committee of bank robbers figuring out how to make safecracking legal.

But they dare not launch the scheme in the USA. Rather, in 1990, one devious little bunch of operators out of Texas, Houston Natural Gas, operating under the alias "Enron," talked an over-the-edge free-market fanatic, Britain's Prime Minister Margaret Thatcher, into licensing the first completely deregulated power plant in the hemisphere.

And so began an economic disease called "regulatory reform" that spread faster than SARS. Notably, Enron rewarded Thatcher's Energy Minister, one Lord Wakeham, with a bushel of dollar bills for 'consulting' services and a seat on Enron's board of directors. The English experiment proved the viability of Enron's new industrial formula: that the enthusiasm of politicians for deregulation was in direct proportion to the payola provided by power companies.

The power elite first moved on England because they knew Americans wouldn't swallow the deregulation snake oil easily. The USA had gotten used to cheap power available at the flick of switch. This was the legacy of Franklin Roosevelt who, in 1933, caged the man he thought to be the last of the power pirates, Samuel Insull. Wall Street wheeler-dealer Insull creator of the Power Trust, and six decades before Ken Lay, faked account books and ripped off consumers. To frustrate Insull and his ilk, FDR gave us the Federal Power Commission and the Public Utilities Holding Company Act which told electricity companies where to stand and salute. Detailed regulations limited charges to real expenditures plus a government-set profit. The laws banned "power markets" and required companies to keep the lights on under threat of arrest -- no blackout blackmail to hike rates.

Of particular significance as I write here in the dark, regulators told utilities exactly how much they had to spend to insure the system stayed in repair and the lights stayed on. Bureaucrats crawled along the wire and, like me, crawled through the account books, to make sure the power execs spent customers' money on parts and labor. If they didn't, we'd whack'm over the head with our thick rule books. Did we get in the way of these businessmen's entrepreneurial spirit? Damn right we did.

Most important, FDR banned political contributions from utility companies -- no 'soft' money, no 'hard' money, no money PERIOD.