Bush Backer Reaps Profits in Calif. Crisis

One of the biggest beneficiaries of the California power crisis is a Texas energy conglomerate that more than any other single company has helped bankroll President Bush's political career.

Enron Corp. of Houston is among a handful of a new generation of independent electric power brokers and producers that have reaped giant revenue increases from California's power shortages and higher natural gas prices nationwide.

The new president's rejection of price controls to hold down soaring electricity costs in the Golden State reflects the views of Enron, the largest wholesaler of electricity and largest owner of natural gas pipelines in North America.

The company and its employees have given more than anyone else to Bush's two campaigns for Texas governor, his unsuccessful House campaign in 1978 and last year's race for the White House, according to the watchdog Center for Public Integrity.

Enron and its employees gave $113,800 to Bush's presidential campaign, making it his 10th most generous contributor; $250,000 to the Republican National Convention host committee; and $300,000 to the Presidential Inauguration Committee.

Enron Chief Executive Officer Kenneth Lay, who raised more than $100,000 for Bush's campaign, is a member of the president's energy transition team and attended his economic summit.

"I clearly think Ken Lay and the Enron Corp. has President Bush's ear on energy matters," said Craig McDonald, director of Texans for Public Justice, an advocacy group critical of Bush. "They had his ear when he was governor. It's no surprise that Bush's policies mirror those of Enron."

Energy Industry Political Contributions Up 46 Percent

Enron spokesman Eric Thode said Bush campaigned as "a proponent of states' rights and deregulation. He doesn't need anybody to suggest that to him."

White House spokeswoman Claire Buchan also denied that Enron influenced Bush's decision Tuesday to continue for only another two weeks Clinton administration orders to the company and other power providers to continue shipping electricity to California's near bankrupt utilities.

"The president believes this is an issue that was created by this rather unique legislation in California and that by providing the two weeks, it will enable California to take the steps that it needs to do to begin to resolve this situation," she said.

Overall, Enron gave $2.3 million to federal candidates and the political parties during the 2000 election, more than double its $1.1 million in 1998 and more than any other energy company, according to the Center for Responsive Politics, a nonpartisan research group that studies campaign finance. Almost three-fourths of the company's donations went to Republicans.

Right behind Enron in campaign contributions from energy companies was Southern Co., whose Southern Energy subsidiary, recently renamed Mirant, is an electricity supplier in California. Atlanta-based Southern Co. gave $1.3 million in 2000, including $14,000 directly to Bush.

Energy and natural resources companies contributed $59 million to candidates and parties in 2000, a 46 percent increase over the $40 million in donations made during 1998. Bush received $2.8 million in donations from the industry, compared with $305,310 for his Democratic opponent, Al Gore.

Deregulation in California has sent energy prices skyrocketing. The state's power grid managers told the Federal Energy Regulatory Commission that California utilities paid $30 billion for power in 2000, more than four times what they paid the previous year.

Although Enron pulled out of the retail electricity market in California, the company remains a major supplier of wholesale power to the state's utilities through its electricity marketing subsidiary.

On Monday, the company reported that its income on wholesale services rose 72 percent last year to $2.3 billion and that it sold 62 percent more electricity than in 1999. The company did not break down its income or power sales volumes in California.

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