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A judge has ruled that --surprise!--a Texas energy company manipulated the natural gas market to create the phony shortage that cost California consumers billions of dollars last year.

However, the decision faces review by the Federal Energy Regulatory Commission.

From The New York Times:

WASHINGTON, Sept. 23 | An administrative law judge concluded today that the El Paso Corporation illegally helped to drive up prices for natural gas in California during the state's power crisis in 2000 and 2001, the first time any federal regulatory official has determined there was widespread manipulation of energy supplies.

In the ruling, Curtis L. Wagner Jr., the chief administrative law judge at the Federal Energy Regulatory Commission, essentially validates the suspicions of California officials that El Paso, the nation's largest natural gas company, withheld natural gas from the state, thus driving up the cost of electricity that was generated by gas-fired turbines.

"El Paso Pipeline withheld extremely large amounts of capacity that it could have flowed to its California delivery points," Judge Wagner said in the ruling. El Paso's actions significantly increased the price of natural gas flowing to California, he added, and "substantially tightened the supply of natural gas at the California border."

But the decision faces review by the four-member energy regulatory commission and, if upheld there, an almost certain appeal to a federal appellate court.

El Paso predicted that the ruling would be reversed. In a statement, the chairman and chief executive of El Paso, William A. Wise, said: "We are disappointed that today's proposed decision does not recognize the substantial record evidence supporting El Paso Natural Gas's position that the pipeline was operated properly. We are confident in the strength of our position."

Hmm. Seems to be counting on FERC to scuttle this ruling. And why shouldn't he? FERC wasn't even going to investigate this until the press started hammering away at it:

The California Public Utilities Commission filed a complaint at the FERC against El Paso in early 2000, but the case languished for close to a year. In March 2001, The New York Times, as part of a reporting project with the PBS program " Frontline," disclosed that internal El Paso documents showed senior executives discussing a plan to give them more control of gas markets, including the "ability to influence the physical market" to benefit the company.

But surely now that FERC has been FORCED to investigate, and now that a judge has ruled--after considering all the evidence--that El Paso is guilty, the agency will support the decision, right? El Paso has no hope that the big, bad government agency FERC will save their butts by overturning it, right? After all, government regulatory agencies are full of anti-business, meddling bureaucrats -- right?

Wrong. The energy business runs FERC. Here's the way Rep. BILL PASCRELL JR. of N.J put it:

"The Federal Energy Regulatory Commission's mission is to regulate the energy industry. Two of its commissioners, Patrick Wood III, the FERC chairman, and Nora Brownell, were recommended by Kenneth L. Lay, Enron's former chairman. These same commissioners are overseeing FERC's investigation into Enron's practices.

The fox is guarding the henhouse. I have urged Mr. Lay's commissioners to recuse themselves from the investigation to ensure the confidence of the American public. "

And just how did the energy business end up choosing its own regulators? The same way any business gets anything: they bought it. Who from? Check out the numbers as reported to the FEC, and as provided by The Center for Responsive Politics:

El Paso Corp PAC Summary Data:

2002 election (so far):

Contributions from this PAC to federal candidates $585,000
25% to Democrats, 75% to Republicans

2000 election cylce:

Contributions from this PAC to federal candidates $496,550
21% to Democrats, 79% to Republicans

1998 election cycle:

Contributions from this PAC to federal candidates $304,771
23% to Democrats, 76% to Republicans

Guess we know who the great government salesman are. But the PAC donations are nothing compared to El Paso's soft money donations. Check it out:

El Paso's soft money Donations from the 1998 election to the present:

To Republicans: $1,346,364
To Democrats: $7,600

According to my calculator thats 99.43868% to Republicans.

El Paso is, of course, in the "Oil & Gas" sector. And who was the number 1 recipient of donations from that sector during the 2000 election cycle?

The same guy who appointed the FERC commissioners:

1 Bush, George W (R) Pres $1,928,956