Energy ‘crisis’ was a $71 billion hoax, consumer group says

Santa Monica, Calif., Jan. 18, 2002 –The Foundation for Taxpayer and Consumer Rights (FTCR) issued a review of the California energy crisis today, concluding that the energy crisis was all just a hoax to make money.

Using government and industry data, the 58 page report, entitled “Hoax: How Deregulation Let the Power Industry Steal $71 Billion From California,” claims that the California electricity system did not fail according to the laws of supply and demand, as it has been widely portrayed. The California energy crisis, the foundation said, was a hoax orchestrated by a power industry freed from price regulation that will cost $2,200 for every Californian.

The report is available in PDF format at

For nearly a year, the energy industry, state officials and President Bush claimed there was a shortage of energy in California. But the crisis ended late last spring after Governor Gray Davis committed the state to spending at least $43 billion for energy over the next twenty years.

The report accuses the power industry of manufacturing blackouts and threatening more of them so that it could gain profits and overpriced, long-term contracts during the crisis.

The report also warned that unless the state of California regains control of its electricity supply, and makes it publicly accountable, additional artificially-created crises will occur in the immediate future.

“The energy crisis was a hoax, set up by deregulation, to suck billions of dollars out of the state,” said Harvey Rosenfield and Doug Heller of FTCR, a non-profit, non-partisan research and advocacy group based in California. “The utilities, energy companies and power traders backed deregulation because they knew it would be a license to steal. Once freed of state scrutiny — once the cop was off the beat — they held the state hostage until we agreed to pay their demands. When they stole as much as they thought they could get away with, the ‘crisis’ mysteriously disappeared — leaving the people of California stuck with the tab.”

“It wasn’t a shortage, it was a shakedown,” FTCR said.

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