Some State Energy Consultants Own Generators’ Stock

More than half a dozen consultants hired by the state to purchase electricity and to negotiate long-term power deals own stock in generating companies such as Calpine and Enron that have profited handsomely during California’s energy crisis.

The potential conflict of interest emerged Thursday with the release of financial disclosure statements by consultants who have been hired by the state since the start of the power crunch.

Among those disclosing stock ownership were two key negotiators of long-term energy contracts and two workers hired to purchase electricity from generators, including some of the firms in which they hold an interest.

Several other consultants who played key roles in the state’s energy efforts decided not to file financial disclosure statements, citing legal exemptions under state law.

Among those who did not file the financial disclosure statements were a pair of executives at two Wall Street firms that stand to make $14 million if the state buys California’s power grid. Of about 50 consultants hired by the state in the past six months, 27 filed the disclosures.

The disclosures follow a firestorm in Sacramento last month over the hiring by Gov. Gray Davis of two media consultants also employed by Southern California Edison, the troubled utility that is negotiating with the state over a bailout package.

Steve Maviglio, a Davis spokesman, said the governor’s legal staff was reviewing the financial disclosure forms for any potential conflicts of interest.

“If there’s anything inappropriate,” Maviglio said, “then we’ll deal with it.”

Republicans, however, said the hired workers had revealed overt conflicts that clearly violated state law.

Secretary of State Bill Jones, a Republican running for governor against Davis next year, said the revelations call into question the work performed by the consultants on high-priced energy contracts that are “going to mortgage our children’s future for decades to come.”

“If you show a conflict, the potential is there for collusion,” Jones said. “I’m not accusing anyone, but that’s why you have disclosure.”

Rob Stutzman, a state GOP spokesman, said he was particularly troubled because the consultants had delayed filing the disclosure forms for months. Under state law, the forms are supposed to be submitted within 30 days after the consultants go to work for the state.

Most of the energy consultants, who could not be reached for comment, reported owning relatively small amounts of stock in energy firms, generally less than $10,000.

But one of the new workers, William Mead, disclosed that he owned between $100,000 and$1 million in Calpine, a San Jose-based energy firm. Mead did not report when the stock had been purchased.

Only one of the contractors reported selling off stock after coming to work for the state.

Vikram Budhraja, president of Pasadena-based Electric Power Group LLC, on Jan. 11 purchased between $10,000 and $100,000 in stock of Dynegy, a electricity and natural gas producer. He sold it off on Jan. 29, 10 days after he came to work for the state. Budhraja has been a top negotiator of the state’s long-term energy contracts, which have included a deal concluded March 2 with Dynegy.

Richard Ferreira, a retired Sacramento Utility District executive hired by the state to negotiate long-term power contracts, reported the purchase of between $2,000 and $10,000 of stock in Calpine, a San Jose-based energy firm, in August 2000. He also purchased a similar amount of stock in General Electric Co., which produces power plant equipment, in April 2000.

Bernard Barretto, an energy trader, reported that he owned an undisclosed amount of stock in Enron Corp., a big Texas-based energy firm. Elaine Griffin purchased between $10,000 and $100,000 in Calpine stock on Feb. 1, less than three weeks before she came to work for the state as an energy trader. Constantine Louie, an energy scheduler, reported owning between $10,000 and $100,000 in Calpine stock.

Republicans took credit for forcing the Davis administration to file the reports, a charge the governor’s office brushed aside.

Jones, the secretary of state, held a news conference Tuesday to complain about the failure of nearly all the state’s energy consultants to file any sort of financial disclosure forms. The statements were only made available late in the afternoon Thursday, months after many consultants went to work for the state.

Maviglio, the governor’s spokesman, said the delays were explained in part by negotiations that began in March with the Fair Political Practices Commission, the state’s ethics watchdog, to determine if the consultants were required to file the forms.

He also suggested that Jones’ accusations were fueled more by campaign politics than any devotion to constitutional duty.

“One needs to question why the secretary of state is using taxpayer money to investigate something beyond his jurisdiction,” Maviglio said. “That’s why we have an FPPC, to look at these kinds of things.”