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Tuesday, February 22, 2011

WisCONsin -- or: Koch is the new Enron

The big story begins here by way of Corrente. Basically, Governor Walker of Wisconsin wants to sell state-owned power plants to private owners -- without bidding. No bid contracts = CORRUPTION. As one Corrente comment puts it:
Buying up existing power plants is one of the major operations of Koch Industries and this explains their sudden interest in Wisconsin - an opportunity to expand their empire on the cheap.

The provision eliminates all oversight of these no-bid sales.
Until now, I thought Walker was an ideologue. Incorrect. He's in it for the money. That's why Walker ginned up the ersatz state budget "shortfall" in the first place.

Are you starting to see the bigger picture?

Salon has published a strange article claiming that Koch does not own power plants. Wrong.

Here's the part Salon doesn't tell you. Koch industries is the leading partner in a firm called Entergy-Koch, LP, described as
a new wholesale trading, transportation and marketing company based in Houston...
The firm was "new" as of 2001.
EKLP, a privately held company formed by subsidiaries of Entergy Corporation and Koch Industries, Inc., delivers, markets and trades power, natural gas and other energy-related commodities, including weather derivatives, through wholly owned subsidiaries Axia Energy, LP, Axia Energy Europe Ltd., and Gulf South Pipeline Company, LP.
Now check out this bio of the former head of Entergy:
he was responsible for Entergy’s 30,000 megawatts of generation assets, including 73 gas/oil-fired plants, 10 nuclear plants, 6 coal-fired plants...
Given the heavy Koch investment in pro-Walker propaganda (at this moment, you can see Koch-funded ads all over Huffington Post), you know that EKLP plans to profit from Walker's no-bid contracts.

Oh -- you should note that in 2004, Merrill-Lynch bought the energy trading aspect of Entergy-Koch. Nowadays, Merrill Lynch is, of course, the "wealth management" division of Bank of America. Hmm. You think maybe this is what Assange has on B of A...?

At any rate, we now have a fairly good idea of what's really going on...

This is the California energy crisis all over again. Frankly, I've suspected for a while now that the wheeler-dealers were going to make a stab at repeating the Enron scenario.

A big clue came in this very important 2008 story. You may have seen it before: The piece is about Axelrod's side company ASK, which uses "astro-turf" tactics to manipulate public opinion and to create a false impression of grassroots support for policies that only a big, heartless corporation could love. The really funky stuff hits you on page 2:
ASK's relationship with ComEd goes back much further: The Chicago-based utility says ASK has been an adviser since at least 2002. ASK's workload picked up in 2005, as the Exelon subsidiary was nearing the end of a 10-year rate freeze and preparing to ask state regulators for higher electricity prices. Based on ASK's advice, ComEd formed Consumers Organized for Reliable Electricity (CORE) to win support.

One TV commercial, penned by ASK, warned of a ComEd bankruptcy and blackouts without a rate hike: "A few years ago, California politicians seized control of electric rates. They held rates down, but the true cost of energy kept rising. Soon the electric company went bust; the lights went out. Consumers had to pay for the mess. Now, some people in Illinois are playing the same game." CORE, which describes itself on its Web site as "a coalition of individuals, businesses and organizations," was identified as the ad's sponsor. After a complaint was filed with state regulators, ComEd acknowledged that it had bankrolled the entire $15 million effort.

The message seemed effective...
This "effective" message spun reality on its head. That's not what happened in California.

Yes, electricity rates skyrocketed and rolling blackouts occurred in 2001 -- but not because "politicians seized control." Quite the opposite: Politicians deregulated energy.

I'll say again what I've said before. Hell, I may even give these words a permanent place on the masthead: Deregulation invites crooks to take over, just as crooks would take over your town if all the cops disappeared.

In California, the blackouts and high prices occurred not because rates didn't match the "true cost" of energy. Just the opposite. Wikipedia, surprisingly, has it right:
California had a shortage of electricity caused by market manipulations and illegal shutdowns of pipelines by Texas energy consortiums.
The key conspirator was Enron. They were in the "energy trading" business -- just like Entergy-Koch.

Incidentally, although everyone now agrees that the California crisis was fabricated, there was a time -- as recently as seven-or-so years ago -- when anyone who made that claim was castigated as...wait for it...a "conspiracy theorist." Back then, anyone who told the truth about the crisis had to endure ever-so-clever references to tin foil headgear. We also suffered through the usual pop psyche drivel: "Conspiracy theorists search for simplistic answers in a complex world..."

Then we got audio recordings proving that Enron schemers planned the whole thing.

Incidentally, here's the Cato version of history: "Did Enron Pillage California?" Since the Kochs fund Cato, you know what the answer will be before you read the article. Also see here.

By the way -- am I the only one who recalls that, even as the blackouts walloped California, the internet pundits and the cable news talking heads overflowed with Axelrodian "astroturfed" commentary pushing for still more energy deregulation in other states? States like Wisconsin? Because, y'know, that trick worked out soooo freaking well in the Golden State...

The exposure of Enron may have set those schemes back a decade. But now it's time for Enron II: The Kochtopus Strikes!

Time has passed, and Axelrodian propaganda trickery has made many people forget what really went down in California. So go ahead. Call me a conspiracy theorist. Offer your bon mots about foil chapeaus. I'll stand my ground: They're gonna pull the same shit again.

The Wisconsin face-off ultimately is not about unions, and it isn't about libertarian ideology. Bend over, rate-payers in the Midwest: You are about to get (Ken) Lay-ed...by a big, bad Koch.
Comments:
Thanks for getting me to look into this topic.
As far as I can tell, Entergy-Koch L.P. (which is no longer operative) did not own powerplants (Entergy-Koch was apparently just an energy trading company; though Entergy did itself own powerplants).
However, the core claim in the Slate article is indeed incorrect.
Claim: "the Kochs, as far as I can tell, do not seem to be in the business of actually buying, selling or operating 'heating, cooling and power plants.'"

Clear counterexample:
http://www.thefreelibrary.com/NRG+Energy+Acquires+Koch+Power+Louisiana.-a064464140
"NRG Energy, Inc. (NYSE: NRG) announced today that its wholly owned subsidiary, NRG South Central Generating LLC, has acquired the Koch Power Louisiana Sterlington Project from Koch Power Inc. Koch Power Louisiana currently consists of four generating units totaling 75 megawatts (MW) of summer capacity. Plans call for a total of 10 combustion turbines capable of generating 200 MW of power to be in place prior to the summer 2001 peak demand season."

http://www.deq.state.la.us/portal/portals/0/enforcement/bep/pdf/NRG.pdf
(The latter link contains details about a related legal case - having to do with Koch's construction of the power generating plant and permit issues involving NRG, which purchased the plant from Koch).

In general, it appears that purchase and sale of electrical power is a significant business for Koch Industries - a couple example links:
http://cjonline.com/stories/090700/bus_bizbrfs07.shtml
http://books.google.com/books?id=YtNUymES-wQC&pg=PA134&lpg=PA134&dq=%22koch+energy+trading%22+electricity&source=bl&ots=iwww5zJYhQ&sig=x1XMI4R2VZd7-Y3Qp3i58Dg733k&hl=en&ei=SdNkTeWFAczpgAfAqNyxBw&sa=X&oi=book_result&ct=result&resnum=2&ved=0CBsQ6AEwATgU#v=onepage&q=%22koch%20energy%20trading%22%20electricity&f=false

(Note - that last link indicates that Koch industries was probably a player in the California electricity crisis)
 
Walker needs to be stopped, but I am much heartened by the response of American unions to these new attempts to strip working class Americans of their standard of living to make the rich richer. Its time for a long overdue fightback. This country isnt just for the benefit of the rich - or at least thats what I used to think.

On the rhetorical question you asked regarding Bank of America ("is this what Assange has on them?") I have a number of theories about this. My best guesses are

1) Bank of America was insolvent - probably days from collapse at one point. It probably isn't that far from insolvent now.

2) The US government forced them to buy ML against the will of the CEO, and expressly forbade Lewis from putting the issue to the shareholders. My guess is that Lewis knew it was a bad decision (Lewis is an idiot but he is not THAT stupid) and would cost shareholders a lot of money, and so he should have resigned when they pressured him, but didn't have the courage.

3) an email exchange where senior execs laugh at the American people and the abuse they are getting away with. I can imagine a specific issue where this would be particularly embarrassing. When ML was preparing to pay one last round of bonuses, they could easily be described as asset stripping the firm before BoA took over. Their defence has always been that they didn't know how bad the results were going to be. What if they did know, and still decided to pay themselves one last time?

Those are my guesses.

Harry
 
Entergy is still in business. Here is the website...

http://www.entergy.com/

According to this page...

http://www.uspages.com/companyID221.htm

...they did five billion dollars' worth of business in 2005.

I am assuming that Koch and Entergy are heavily invested in each other. The trading company of Entergy-Koch is still listed in the Houston phone book, so they must be doing SOMETHING.
 
Read it and sent it to:
Stephanie Taylor, BoldProgressives.org
info@boldprogressives.org

Suggest other readers do the same.
 
I hope somebody has got hold of Ed Schultz and Rachel Maddow about this obvious and blatant kickback scheme on the part of the Koch brothers.
 
Me, I'm doing nothing about this. Those idiots in Wisconsin elected this Walker guy so let them suffer the consequences of draconian rate hikes.

You know that if this goes thru they'll be told the hikes are due to government interference and they'll believe it again.

I'm all out of sympathy for people like them and the 'bots.
 
Good piece. The Kochs have always had their hand in the generating and transmission of oil, gas and electricity. They held stock in Entergy at least as of last year -- Ent has financial and managerial interest in both the Indian Point 3 nuke in NY and Yankee Nuclear in Vermont. Watch the Ks play for the Wisc. power plants however the current crisis resolves. Of course the oligarchs want to break the public sector unions -- easier for them to implant a one-party state apparatus.
 
Thanks for this, Joseph.

Mr. Mike, I'm with you. No sympathy for Wisconsin. They also kicked out Russ Feingold, and they voted for Zerobama in the primary. They deserve what is coming to them.

For me, Wisconsin is the New Hampshire of 2000. The Naderites in NH are what made the fraud in Florida viable to install Bush. Wisconsin helped elevate the current fraud in the WH, let them get defrauded themselves.
 
They won with 100% of the vote?

Peg
 
Zee and Mike, I think you are being far too harsh.

Wisconsin gave us a Feingold. How many other states would have made (or let) that happen?
 
Zee and Mike,

1. I'm from Wisconsin. I certainly didn't vote for Walker. Neither did almost half the state. Moreover, by this reasoning, we should have no sympathy for U.S. residents, since they elected Bush, then Obama. So let them suffer!

2. In addition to Feingold, Wisconsin also gave the world Fighting Bob La Follette. It was the birthplace of collective bargaining for public workers. It was the birthplace of AFSME. For decades - from 1910 to 1960, Milwaukee elected socialist mayors.
(unfortunately, the populist nature of Wisconsin politics also allowed the election of McCarthy). But much of the time, Wisconsin has been at or near the forefront of left politics in the U.S.
 
Entergy owns multiple plants. When I was digging into this last night, it looked like Merrill Lynch acquired the core of Entergy-Koch (the trading business) in 2004, and the remainder ceased operations in 2009. Entergy-Koch was a 50:50 partnership set up between Entergy and Koch in 2001, involving certain of their energy trading businesses.

It might be worth digging more into entanglements between Entergy and Koch.

But as I noted above - Koch itself clearly has constructed, operated, and sold power generating plants.
 
I remember back in the '70's, when the Koch's biggest asset was a small
refinery just south of Mpls, MN. I did some work for them. Now, there's
a question about who has the largest
privately owned megabusiness, Cargill or Koch. They're a bunch of gangsters that have mutated into supervillans via lax enforcement of
existing laws, and repeal of same.
I live in WI, and will not bend over, but suspect Koch will buy the publicly owned power plants for pennies. The majority of my fellow Wisconsinites have bent over, and the Koch's are laughing their asses off. Happening all over; what can we do? Rob
 
Have you heard about Feingold's new group?

http://www.progressivesunited.org/
 
Well said, Joseph. You are entirely correct about California and Enron: and when Gov. Davis tried to address it, VP Cheney laughed and the FERC did nothing. Then the recordings of the Enron traders came out about robbing "Grandmother Millie" -- but California was millions or even billions in the hole and Schwartzenegger was on his way to becoming governor -- even though he got less votes than Davis in the recall election.

It was a shameful chapter in our nation's history and not one I want to see a repeat of.

djmm
 
You're back! :-) And still in good form too.

Me, I've been wondering who on earth the lefthand head on the Shepherds Monument at Shugborough might depict. Not George Anson. Probably not his brother Thomas either, although it's possible. Looks a bit like a bald version of Francis Dashwood...
 
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