Californians were laughing and smiling over their successful recall of Gov. Gray Davis. But nobody was smiling more than Ken Lay, former CEO of Enron. He had just suckered an entire state. While much of the campaign focus was on Ahnulds behavior with the ladies a decade ago, he carefully avoided mentioning his dalliance with the barons of energy two years ago. It was May 17, 2001, at the Peninsula Hotel in Los Angeles that Schwarzenegger met with Lay, who was then the big honcho of Enron, other energy company chieftains, and convicted stock swindler Mike Milken. The story came to light when investigative reporter Greg Palast came into possession of 34 Enron internal memos that outline the substance of that hotel meeting. It turns out that what Californians really voted for was to let Kenny Boy and his fellow bandits keep the $9 billion they ripped off from residents during the phony energy crises of 2000-2001. How so? The biggest threat to Lay and company is a lawsuit filed last year under Californias civil code provision called the Unfair Business Practices Act. The lawsuit, now headed for trial in Los Angeles, is aimed at forcing the energy banditos to give back the $9 billion. That kind of lawsuit takes some backbone to prosecute. Who is the plaintiff in this action? It was Cruz Bustamante, the lieutenant governor and main candidate opposing Arnold. One month after Bustamante filed the suit, Lay called his secret hotel huddle and spelled out his plan to undercut Davis and try to quash the legal action against him and the others. This is the guy Bush only recently met, remember. As Bustamante pushed his action through the court process, Davis administration demanded Bush have his energy regulators order the refund of the $9 billion. Not too likely, because the Federal Energy Regulatory Commission is headed by a man proposed by…Ken Lay. The commission still faces a problem. Namely, evidence against the good ol boys is unshakable; fraudulent sales reports, megawatt laundering, fake power delivery scheduling and bald-faced conspiracy (like Arnolds meeting). Commissioners, however, rose or maybe descended, to the occasion. They proposed to lodge conspiracy charges against the energy companies, but behind closed doors (love that secrecy), they would offer them deals to pay back only two cents on the dollar. That plan wouldnt work, though, if the governor didnt go along. Solution: recall the governor. The most likely successor in their view was not Schwarzenegger but Bustamante, whom they saw as a much bigger threat to them than Davis. The answer in their view was to smear Bustamante. Didnt he take donations from Indians (and not Ken Lay)? Now the bottom line: when Arnold takes office, he simply blesses those sweetheart deals with Lay and his buddies. That would very probably torpedo the lawsuit because few judges will allow such a case to reach trial if the governor has already turned the matter over to a regulatory agency for settlement. And if $9 billion were good, even more would be great. So we have the governator about to become the deregulator. He is planning to push for deregulation of Californias electricity markets. Guess who is behind that move? But it wont come right away. Ahnuld will be busy grappling with the state budget for a while. It will be next year before he will try to put through changes aimed at dropping energy costs for industry and large power users and urging energy firms to build more power plants to meet rising demand. We will need more power, and we have to make some serious decisions about how thats going to happen, said Severin Borenstein, who directs the University of California Energy Institute. For the next six months or so, were in good shape, but if we put it off for a year or a year and a half, then were going to be under real pressure. Schwarzeneggers energy package has a strong resemblance to the policies of former Gov. Pete Wilson, who pushed for deregulation in the 1990s and helped get the state into its present mess. One of Wilsons former team members is joining Arnolds group, and he is a big booster of deregulation. Wilson was Arnolds campaign manager. Mike Florio, the senior attorney for The Utility Reform Network, declared: Deregulation has already cost the state $50 billion, give or take. Why on earth anyone would want to do that again is mystifying to us. Can you say, ripoff plan? Schwarzenegger was asked about his little huddle with Kenny and Mike and the others back in 2001, although not by Californias main news outlets. Arnold said he just couldnt remember any such meeting. When Palast called and asked for comment even earlier, Schwarzenegger did not respond. Arnold is also facing an emerging battle with the state legislature over the proposed dereg plan. Not only is the legislature in no mood for it, said state Sen. Joseph Dunn of Orange County, the polling shows that 75 percent of Californians want to re-regulate the electricity system. In addition to all this, the integrity of the election is being called into question. At the heart of it are Diebold electronic voting machines. Some 13 counties scattered across California voted on and had their votes counted on Diebold machines. The numbers show about 17.8 percent of the states 7,842,630 votes were tallied by Diebold. An observer with a background in statistics and averages looked at the results and suspected votes were being skimmed from top candidates and awarded to more obscure contenders who had little chance of affecting the election outcome. He found that in counties using Diebold machines, the election results were heavily skewed toward low-scoring candidates. This observer charged that Diebold tried to affect the election by moving votes from high-ranked to low-ranked candidates. Diebolds CEO recently was quoted as saying he intended to deliver the 2004 election to George W. Bush. Kenny Lay, Arnold, more dereg plans and funny stuff at the polls. Theres that same old stink again. Can you recall a recall?