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Put that in your pipeline and smoke it

"California was AWOL in fighting against fraud, manipulation…"

Gas-distribution companies got the short end in today's Supreme Court ruling.
Gas-distribution companies got the short end in today's Supreme Court ruling.

The United States Supreme Court decided today (April 21) that companies can sue under state antitrust laws when they believe pipeline companies are committing fraud by manipulating indexes they use to figure the market price of gas.

A group of companies, including Learjet, originally sued a gas-distribution company, Oneok. The pipeline company lost and took the case to the Supreme Court, which today ruled for the gas-buying companies and against Oneok.

The irony is that the California Public Utilities Commission had a major investigation of such fraud earlier in this century.

"The central question is — where is California?" asks Loretta Lynch, who was president of the utilities commission, but was replaced by the business-cozy Michael Peevey in late 2002 because utilities pressured then-governor Gray Davis.

Now Peevey is under state and federal investigation for possible fraud of his own in making secret deals to protect the interest of utilities and pass costs on to ratepayers.

California, says Lynch, was "in the backroom, having made a deal to not take any action on the natural pricing manipulation and fraud for which we found substantial evidence during the time I was at the CPUC."

In the 2005-2006 period, the gas-fraud investigation was quietly dropped. Peevey headed the commission then, and Lynch suspects this is still another case of his back-channel dealings on behalf of corporations.

"California was AWOL in fighting against fraud, manipulation, and in fighting for its gas consumers," she says.

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Gas-distribution companies got the short end in today's Supreme Court ruling.
Gas-distribution companies got the short end in today's Supreme Court ruling.

The United States Supreme Court decided today (April 21) that companies can sue under state antitrust laws when they believe pipeline companies are committing fraud by manipulating indexes they use to figure the market price of gas.

A group of companies, including Learjet, originally sued a gas-distribution company, Oneok. The pipeline company lost and took the case to the Supreme Court, which today ruled for the gas-buying companies and against Oneok.

The irony is that the California Public Utilities Commission had a major investigation of such fraud earlier in this century.

"The central question is — where is California?" asks Loretta Lynch, who was president of the utilities commission, but was replaced by the business-cozy Michael Peevey in late 2002 because utilities pressured then-governor Gray Davis.

Now Peevey is under state and federal investigation for possible fraud of his own in making secret deals to protect the interest of utilities and pass costs on to ratepayers.

California, says Lynch, was "in the backroom, having made a deal to not take any action on the natural pricing manipulation and fraud for which we found substantial evidence during the time I was at the CPUC."

In the 2005-2006 period, the gas-fraud investigation was quietly dropped. Peevey headed the commission then, and Lynch suspects this is still another case of his back-channel dealings on behalf of corporations.

"California was AWOL in fighting against fraud, manipulation, and in fighting for its gas consumers," she says.

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Comments
16

Is this a dumb question...is this the SAME Loretta Lynch we are hearing about in the Nation's Capitol?

April 21, 2015

Wabbitsd: No. Completely different people. This Loretta Lynch was an excellent, pro-consumer president of the CPUC. In late 2002, then-Gov. Gray Davis named Mike Peevey as president, demoting Lynch. Peevey had only been on the commission a short time. Davis named him because utilities were complaining about Lynch's pro-consumer stances. Peevey took over and was pro-utility, anti-consumer for 12 years. He ignored protocol and dictated decisions that the entire commission was supposed to make. Best, Don Bauder

April 21, 2015

Thanks, Don...I remembered Lynch as a pro-consumer advocate but it was difficult to tell what happened to her. Do you know where she is these days?

April 21, 2015

Wabbitsd: I believe she is a lecturer at UC-Berkeley. I have talked to her several times recently and never asked her what she is doing. I will. Best, Don Bauder

April 21, 2015

Don't feel bad, Wabbitsd, I also thought it was the same Loretta Lynch who is being stymied for appointment to U.S. Attorney General. Interesting that Gray Davis appointed Peevey to the CPUC and Jerry Brown kept him there. Birds of a feather.

April 21, 2015

monaghan: Schwarzenegger kept Peevey as CPUC president, too. Best, Don B auder

April 21, 2015

But... but... big government and regulations were going to save us! Wait, I know, we should have MORE government and regulation and bureaucrats. Surely another layer or two will save us.

April 22, 2015

jnojr: We have learned that regulation doesn't work and neither does deregulation. In a regulated environment, we get "regulatory capture," or the regulators run by the regulated. The CPUC under Peevey was a classic case of that, although in that case it appears that the CPUC crossed the line into dubious legality in protecting the companies.

Deregulation has failed because the private sector immediately took control without fear of being caught. Remember the energy crisis in California?

Greed is at the heart of the failure of both regulation and deregulation. Best, Don Bauder

April 22, 2015

So what is the solution?

April 22, 2015

Revolution and start over. I really don't know.

April 22, 2015

AlexClarke: See my answer to eastlaker's query below. Let's try that first. Best, Don Bauder

April 22, 2015

eastlaker: To reform the banking industry, I think we need two things 1. Very tough regulation -- not namby-pamby regulation that we get from the Securities and Exchange Commission, for example. No longer can the perpetrator "neither confirm nor deny" his participation in a scam. We want guilty pleas and in many cases, criminal penalties. No more "I didn't do it but I won't do it again."

  1. We need much tougher criminal penalties for wrongdoers. Longer prison sentences. When wrongdoers are caught stashing money and avoiding U.S. regulation by doing business through offshore tax and secrecy havens, there should be no amnesties. There should be severe prison sentences for offenders.

There should be criminal penalties for other kinds of regulation. For example, what is unfolding in the California Public Utilities Commission (CPUC) suggests there should be prison sentences for those who broke the law. Best, Don Bauder

April 22, 2015

Agreed but it seems that we are headed for a revolution. When the middle class is eliminated and we have the rich and the poor and when the only jobs available are low wage and all the wealth and the government is controlled by the few it is a recipe for revolution.

April 23, 2015

AlexClarke: I doubt if there will be a revolution or even a powerful progressive/populist movement. Polls show that the public has no idea how wide the gap between the 1% and the rest of the population is, even though the gap gets lots of media attention. I think if the public knew the truth it would be horrified, but the message isn't sinking in.

One extremely undesirable outcome could wake up people. We are headed for deflation because of the uneven distribution of wealth and income. Middle class income is not growing. GDP is more than 70 percent consumption, and the flatness of middle class incomes, combined with moderately higher prices, will at some point lead to deflation. Japan and Europe are leading the way. That means depression. People will wake up -- perhaps too late. Best, Don Bauder

April 23, 2015

Yes, we need just what you say, Don--but wouldn't campaign reform need to have been in place for this to happen? With the CPUC completely out of control, (and apparently now even going after solar) it seems that all the authorities that are supposed to be safeguards are just the opposite. Where do we find the leadership to accomplish all this, when local politicians are frequently buffoons, ill-informed, too partisan to think straight and/or empty suits?

April 23, 2015

eastlaker: True. The CPUC is completely corrupt but shielded by the courts. At least, some state legislators are waking up. But if people keep electing buffoons and empty suits, what can be done? Best, Don Bauder

April 23, 2015

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