Conglomerates gobbling up small power companies

While the rest of us were concerned with other matters, some of the wealthiest people on the planet were busy snapping up small, independent power companies. This has happened since President George W. Bush signed the energy bill last fall.

Publisher Mike Ruppert of From the Wilderness publications said: “It is not just that ownership of these life-essential services is being concentrated in a few rich and unregulated hands–it is the identities of the owners that should make you worry about what’s coming. If the writing on this wall got any clearer, you’d need to buy a box of popcorn and sit down for the horror show. Best get a blanket and some long johns first.”

The repeal of the depression-era Public Utility Company Holding Act made it all possible and allows the big utility holders to take these little money machines–into which tens of millions pay monthly payments–and turn them into massive liquidity pools to buy more utility companies or to trade energy for profit.

Why should we care if a few “fat cats” and conglomerates grab up all the utility companies? Because these giants will not be concerned with maintaining the power grid as long as they can, but will speed its collapse. As a Dutch economist said at a Peak Oil conference in Paris in 2003: “It may not be profitable to slow decline.” Ruppert attended that conference and reported on it on his Web site.

He says the money provided by ratepayers will be used to benefit shareholders, not the clientele of the power providers. When it is time to decide whether to make a fat profit or keep people warm, Ruppert said there will not even be a debate.

The grid’s decline will be gradual, sporadic and will mean getting by with less and less. The beginning of this decline is becoming visible this winter. Ruppert said what we are seeing is the start of a bidding war over dwindling energy resources. The bidding war, he said, will only make things worse and accelerate the inevitable collapse, which will bring unnecessary harm to millions.

The man at the penultimate position of power in this dangerous development is Mayo Shattuck III, a key player on Wall Street. He has just guided an $11 billion deal to create the largest utility merger in U.S. history, having a market capitalization of $28 billion. The new company combines Constellation Energy, of which Shattuck is CEO, and Florida Power and Light, well known for its windfarm development. It will operate in several states and therefore not be subject to state regulation.

Shattuck has been involved in deals with Russian ruble trading, Microsoft, Enron, the Bronfman dynasty and a massive insider trading scandal involving international arms trader Adnan Khashoggi’s Genesis Intermedia just before 9/11.

On 9/11, Shattuck was head of the A.B. Brown unit of Deutschebank AG of Frankfurt, Germany. He took over after his good friend A.B. “Buzzy” Krongard left to serve as number three man in the C.I.A. in 1998.

Shattuck presided as huge “put” options were placed with his bank against United Air Lines stock just before the World Trade Center attacks.

“Puts” are bets the price of the stock will fall.

The next day, Shattuck resigned his position, abandoning the latter half of a multi-million-dollar, three-year contract as chairman. He then became CEO of Constellation Energy Group, a rather obscure player in the field. Even more unusual, Shattuck had no background in the energy field.

CEG gained access to Vice President Dick Cheney’s energy task force and also helped refinance the Carlyle Group in its purchase of United Defense Technologies in 2000.

The Brown bank has links to the Bush family that stretch back more than 70 years. It helped organize and manage the bank managed by George W. Bush’s grandfather, Prescott Bush. That bank was Brown Brothers Harriman. The federal government, in the World War II era, shut it down for trading with the enemy. The government said Bush and Harriman were giving financial support to Hitler’s regime in Germany.

The Washington Post reported: “Last week’s $11 billion deal to create the nation’s largest seller of electricity may bode well for investors. But the merger may not be such a good deal for customers of Baltimore Gas & Electric Co., the local utility company from which Constellation of Baltimore was created. The state-regulated company that provides their power will become an even smaller part of an even bigger conglomerate that makes most of its profit through unregulated energy investments.”

That report in The Post was unusual and interesting for the fact that Warren Buffett is a director and major investor in The Washington Post Co. He has assembled nine utility companies under the umbrella structure of MidAmerican Holdings Corp.

Shattuck owns 583,964 shares of Constellation Energy, according to Yahoo Finance. Other declared holdings of Shattuck include: Capital One Financial of New York, Capital Source Inc., and Gap Inc., where he holds 14,319 shares.

Against this backdrop, the long-awaited trial of Reliant Energy of Houston is expected to start soon. Reliant and four of its traders are charged with wire fraud and single counts of market manipulation and conspiracy. The company, which operated California’s grid five years ago, faces millions of dollars in fines, and the four individuals each face five years in prison and fines of $250,000 each if they are convicted, according to investigative reporter Jason Leopold writing on

Prosecutors have accused Reliant of shutting down California power plants to boost its profits during the state’s energy crisis five years back.

Another interesting sidelight on our friend Shattuck: he is on the advisory council for Stanford Business School, from which he holds an MBA. Stanford is home territory for Secretary of State Condoleezza Rice, who used to be provost there. She also is a former member of the board of ExxonMobil Oil Co.

If this winter brings severe cold weather, and the big boys are in charge of the energy companies, how do you think the little guy will fare? Can you say “hypothermia”?

From the Jan. 11-17, 2006, issue

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