Power to the people?

Cartoon: Khalil Bendib, CorpWatch.

Citing a NY Times story about power outages every time there's a storm in New Orleans, John in DC asks in an Americablog post:

Where is Bush? ... Regular power failures. Hmm... what other city has regular power failures? Oh yeah. Baghdad.

We can have a debate about whether or not Entergy deserves a $718 million bailout by taxpayers and ratepayers, or if it should have anticipated a "rainy day" emergency, but it's also true that George W. Bush bailed out ConEdison after 9/11. So, why not Entergy? Given geedubya's close friendship with Ken Lay, the recently-departed-for-hell Enron CEO, and Dick Cheney's private meetings with energy executives in violation of public meeting laws, I think we deserve an explanation.

CorpWatch:

As a publicly held company it ultimately answers first to its shareholders who want to maximize their profits. To that end Entergy has made broad use of limited liability laws to structure the company and its subsidiaries in a way that insulates shareholders from liabilities such as storms. The result is a system whereby the company’s own customers and taxpayers nationwide foot the bill when something goes wrong. ...

The Federal Energy Regulatory Commission (FERC), which has minimal oversight of Entergy, does not require companies like Entergy to carry insurance to cover losses from catastrophic events such as a hurricane, even though conventional wisdom has long considered a Katrina-sized storm and flood inevitable.

A sidebar of the CorpWatch article criticizes the Entergy trend of maximizing profits by creating limited liability subsidiaries and multi-tiered holding companies in an environment of increasingly lax regulations. Entergy may be staging an Enron-style collapse, according to Peter Bradford, Former Commissioner of the Nuclear Regulatory Commission:

“Regulating in this way is like driving drunk,” Bradford went on. “Taxpayers, utility customers and power plant neighbors who thought themselves protected by firm requirements may one day wear the stunned expressions of Enron retirement plan holders or WorldCom investors.” ...

Limited liability structure is an “effective mechanism” for transferring profits up the chain while creating a shield for the parent in case an unanticipated cost occurs at one of the plants.

Related:

Entergy's Entropy

CorpWatch -- Entergy Holds New Orleans for Ransom

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