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Then the governor spoke of Duke Energy's involvement. "You'll not be shocked to hear that Duke acknowledged -- Duke Energy company -- acknowledged not too long ago that they charged the state about $3,800 a megawatt [more than 12 times the proper rate] in January...," Davis testified. "It's clear that the energy companies have exerted extreme power over our market and are driving up prices dramatically."
After Davis spoke, then-Federal Energy Regulatory Commission (FERC) Chair Curt Hebert noted that U.S. regulators had already ordered Duke -- which denies that it did anything wrong in California -- to refund the state its overcharges.
"It was a bit like being in the middle of a riot and seeing people looting stores," says Robert McCullough, an energy consultant who investigated the crisis. "This is by far the largest commercial fraud in the history of the world. Duke was one of the companies involved that had an astonishingly low level of generation during times of crisis... An electrical company is like a fire department, you need to count on them during the emergency."
Considering his position on the energy committee, Graham had to know that Duke was one of the companies suspected of ripping off California residents. When he bought the Duke stock in November 2001, the energy committee was helping to craft legislation designed to keep such crises from happening again. The purchase raises the question of whose side he was on and whether he intended to profit from Duke's manipulation of the California markets.
"While the energy crisis in California may have increased the profits of Duke Energy, it did not help its stock share, since most investors were unaware that Duke was profiting off of California energy consumers to the extent that they were," campaign staffers wrote in their response.
In March 2003, FERC issued a report naming Duke as one of the culprits in the manipulation of California markets. That investigation continues. In May, the company admitted it had engaged in about $1 billion worth of the sort of misleading trades that are often used to pump up financial reports, though company officials still deny any wrongdoing.
Perhaps those trades tricked Graham, since he, again, lost money on the investment. He bought Duke when it was trading at about $38. By July 18, 2002, when he first began selling the stock, it was trading at about $20. He dumped the last of it on September 26, when it was going for $19, precisely half of what he paid for it.
In addition to the thousands of dollars Graham lost in the market, he also seems to have lost his sense of propriety, government watchdogs say.
"It raises certain questions when he's investing in companies he regulates and whether it's based on knowledge he has that the general public doesn't," Ben Allison, spokesman for the Center for Public Integrity in Washington, D.C., remarked when told of Graham's stock dealings. "There are potential conflicts of interests here and serious questions that he should answer."
But who wants to talk ethical violations when a presidential campaign is underway? Graham has speeches to give, the Democratic base to win, terror threats to preach, and songs to sing. The man whom Jay Leno called "Dick Gephardt without the charisma" is livening up his act, and it's no time to be slowed down by reminders of his corporate ties or deep Washington insider status. The truth can only hamper Doodle and his charisma tour.