Information for Call to LA Mayor Dick Riordan

fyi...
---------------------- Forwarded by Karen Denne/Corp/Enron on 05/11/2001
02:36 PM ---------------------------

Karen Denne
05/11/2001 02:16 PM
To: Kenneth Lay/Corp/Enron@ENRON
cc: Rosalee Fleming/Corp/Enron@ENRON, Jeff Dasovich/NA/Enron@Enron (bcc:
Karen Denne/Corp/Enron)

Subject: Information for Call to LA Mayor Dick Riordan

Ken -- Thank you for making next Thursday, May 17 available for CEO meetings
in California. We are working to set up two meetings -- one in Los Angeles
and one in Silicon Valley (we'll call on Scott McNealy's contact person to
help pull the Northern California meeting together). For the Los Angeles
meeting, we'd like you to call Mayor Dick Riordan (213-847-3456) and ask for
his help in pulling together a group of key, influential business leaders.
As background, Riordan is a very wealthy Republican businessman who has been
term-limited out and has not yet made public his future political aspirations
(a bid for governor has been mentioned by insiders).

You might congratulate him on helping to settle the Writer's Guild strike and
ask if he'd now like to resolve the energy crisis (He's in a bit of a spat
with Dave Freeman over who can claim credit for LADWP's success during this
energy situation -- see attached LA Times article). You can say you've been
told that he was one of the clearer heads during the deregulation process and
were instrumental in keeping DWP out of the regulatory mess.

This is an opportunity for Riordan to help broker a solution, and that's why
you're calling him. You met with Robert Day (Trust Co of the West) who
suggested that you call Riordan and enlist his support.

Explain about our comprehensive solution -- business support is critical to
garner political support.

You'll be in Los Angeles next Thursday. Ask if he could invite and host a
meeting of key business leaders and introduce you. I've attached a suggested
list of prominent businessmen, close associates and personal friends of
Riordan's. We'd like to position this meeting as an insider's conversation
of what's going on with the energy situation. This meeting should be for
principals only.

Ask Riordan to identify someone in his office who we can work with to set up
the meeting. Enron's consultant in LA (Marathon Communications) will work to
coordinate the event.

If Riordan is not available next Thursday, ask him if he would ask Eli Broad
(chairman of Sun America and a Democratic billionaire) or Jerry Perenchio
(chairman of Univision) to host the meeting.

Proposed Invitees

*Eli Broad - Chairman, Sun America
*Ron Burkle - Yucaipa Companies
Jeffrey Katzenberg - DreamWorks
Sherry Lansing- Paramount
Nelson Rising- Catellus
Bob Daly - LA Dodgers
Ray Irani - Occidental Petroleum
*Jerry Perenchio - Univison
Michael Eisner/Bob Iger - Disney
Ed Roski - Majestic Realty
Earvin Johnson/Ken Lombard - Johnson Development Corporation
Bruce Karatz - Kaufmann & Broad
Terry Semel - Yahoo!
Gary Winnick - Global Crossing
Henry Yuen - Gemstar
*Carl McKinsey
*Liam McGee - Bank of America
*Barry Munitz - Getty Trust
*Gordon Binder - Amgen (ret)
David Baltimore - Cal Tech
Danny Villanueva - Bastion Capital
Phil Anschutz - Qwest Communications, Staples Center
*Dennis Tito - civilian spaceman (former LADWP Commissioner)
Kent Kresa - Northrop Grumann

Sunday, May 6, 2001
Riordan and Freeman's Feud Erupts in Public
Power: Each questions the other's role in keeping the city free of
California's energy crisis.
By MICHAEL FINNEGAN, TERENCE MONMANEY, Times Staff Writers

?????With California mired in energy troubles, Mayor Richard Riordan and his
former power chief S. David Freeman trumpet the extraordinary fortune of Los
Angeles: no rate hikes and no blackouts.
?????Yet Riordan and Freeman have sullied their mutual success story by
waging bitter campaigns to discredit each other--at first behind the scenes
but now in public.
?????Pettiness, ingratitude, conflicts of interest, overblown claims of
achievement: Such is the back and forth between two leaders who would seem to
have good reason to pat each other on the back.
?????To Freeman, who has resigned as general manager of the L.A. Department
of Water and Power to become chief energy advisor to Gov. Gray Davis, it
seems Riordan resents his high-profile role in trying to steer California out
of the energy crisis.
?????So the mayor, Freeman charged, has elbowed his way into energy issues
that he is ill-equipped to handle and taken steps along the way that could
harm the environment.
?????"With all due respect, I have 25 years of experience and knowledge--and
he has 25 days," Freeman said. "But he's the mayor, and he didn't like it
that I didn't just say yes to everything he came up with."
?????To Riordan, Freeman's efforts to fight air pollution have given short
shrift to the threat of skyrocketing power rates in Los Angeles. The mayor
said Freeman also failed to recognize potential conflicts of interest between
his city and state roles in the power crisis. And he scoffed at Freeman for
saying he had lifted morale at DWP.
?????"Morale was terrible under him," Riordan said. "I mean, they are so
relieved right now."
?????The backbiting has left associates suspecting the clash is really about
egos. City Councilwoman Ruth Galanter sees Riordan and Freeman as proud,
successful men unable to say, "I couldn't have done it without X, Y and Z."
?????"Each of them is used to being the boss and taking pleasure at being
recognized as the boss," she said.
?????Much of the conflict has taken place in private meetings. And the mayor,
a Republican multimillionaire, has taken pains to play down his dispute with
Freeman, a liberal Democrat from Tennessee who wears a cowboy hat and speaks
with a Southern drawl.
?????In an interview after his resignation, Freeman laid out the conflict
point by point, often in terms bluntly critical of the mayor. One of his
concerns, Freeman said, was that Riordan in his final two months as mayor
could reverse the agency's progress in protecting the environment.
?????Freeman cited Riordan's plans concerning coal-fired power plants in
Nevada and Utah that are partly controlled by the DWP, the nation's largest
municipal utility. The first is the Mohave Generating Station in Laughlin,
Nev., a plant that has been blamed for spreading some of the haze that
shrouds the Grand Canyon. The DWP had planned to sell its stake in the plant,
but Freeman said Riordan ordered him to back out of the sale.
?????He described the mayor's move as a sign that Riordan and his appointees
on the board that oversees DWP were "completely insensitive to the fact that
that power plant is one of the most environmentally troubling plants in the
West."
?????"I've worked real hard to try to build some environmental sensitivity
into the DWP policy," Freeman said. "And I am concerned as to whether the
current commissioners and the mayor have that sensitivity, and what they
might do in the interim to basically overturn the progress we've made."
?????The other plant is part of the Intermountain Power Project in central
Utah. Riordan has proposed building a new coal-fired generating unit there,
but Freeman said he objected because of the pollution it would cause.
?????In both cases, Riordan said he was striking the appropriate balance
between protecting the environment and meeting the energy needs of Los
Angeles at an affordable cost. By keeping its share of the Mohave plant and
expanding the Utah plant, Los Angeles can avert the astronomical price hikes
of natural gas--and the sharp rise in ratepayers' bills that would follow,
Riordan said.
?????Natural gas, which provides 26% of the fuel for DWP plants, causes less
air pollution than coal, which provides 51%. The rest is mainly nuclear and
hydroelectric. Los Angeles has averted rate hikes and blackouts in part
because the DWP relies less on natural gas than most other California power
providers.
?????"I favor clean air and more natural gas, but not to the point where
we're going to destroy the economy of Los Angeles," Riordan said.
?????On the Mohave plant, Riordan questioned the benefit of selling the
city's share to a buyer that would simply continue running it.
?????"It's still going to be coal-driven," he said. "How does selling it help
the environment?"
?????The tension between the two has built steadily as the state power crisis
has worsened. With the charismatic DWP chief drawing favorable news coverage
in stories on how L.A. has dodged the crisis, Riordan and the DWP
commissioners began to view him as "too big for my britches," Freeman said.
?????The conflict reached its peak on April 17, the day Freeman resigned to
become the governor's advisor. The DWP board president, Kenneth T. Lombard,
said the mayor told commissioners that day that "it made the most sense to
release him immediately."
?????"All we were doing, frankly, was release him from his responsibilities,
and then whatever time he needed to clean out his office was fine with us,"
Lombard said.
?????From Riordan's standpoint, Freeman needed to be stripped of his
authority right away because of a potential conflict of interest: The city
utility sells surplus power to the state, so Freeman would be on both sides
of the sales.
?????Freeman, who had voluntarily bowed out of a DWP meeting on the state
power crisis earlier that day, was outraged at his sudden release, in part
because he was denied the chance to say goodbye to agency employees. In an
interview, he called the conflict of interest assertion "complete malarkey."
?????"The insinuation that I have done anything less than protect the
interests of the city of Los Angeles is bordering on slanderous, considering
what I've accomplished here," he said.
?????Brian D'Arcy, who heads the union local that represents 6,000 DWP
employees, agreed that Riordan and his commissioners "kind of ran him out of
here. For David to be summarily jettisoned out of here without even a
howdy-do is absolutely tacky," D'Arcy said.
?????Riordan said Freeman deserves "an A-plus" for his work at DWP. The mayor
conceded that he knew of nothing that Freeman had done "to hurt Los Angeles."
But, he added, "when you have a conflict of interest, you have to act before
anything happens."
?????Freeman has long bridled at the oversight of DWP, not just by the mayor,
but by the agency's board and the City Council. In 1998, he called for City
Charter amendments to consolidate authority in a more independent board of
directors. The proposal went nowhere.
?????Freeman's concerns were echoed in a report to be released Monday. The
Rand Enterprise Analysis report was commissioned by the DWP. It calls for
restructuring DWP management much the way Freeman proposed. But Riordan and
Galanter, who chairs the Council's Commerce, Energy and Natural Resources
Committee, rejected the concept. Copyright 2001 Los Angeles Times