Oh Those Big Sillys at Enron!
http://www.cbsnews.com/stories/2004/...le620626.shtml
Enron Traders Caught On Tape
LOS ANGELES, June 1, 2004
When a forest fire shut down a major transmission line into California, cutting power supplies and raising prices, Enron energy traders celebrated, CBS News Correspondent Vince Gonzales reports.
"Burn, baby, burn. That's a beautiful thing," a trader sang about the massive fire.
Four years after California's disastrous experiment with energy deregulation, Enron energy traders can be heard – on audiotapes obtained by CBS News – gloating and praising each other as they helped bring on, and cash-in on, the Western power crisis.
"He just f---s California," says one Enron employee. "He steals money from California to the tune of about a million."
"Will you rephrase that?" asks a second employee.
"OK, he, um, he arbitrages the California market to the tune of a million bucks or two a day," replies the first.
The tapes, from Enron's West Coast trading desk, also confirm what CBS reported years ago: that in secret deals with power producers, traders deliberately drove up prices by ordering power plants shut down.
"If you took down the steamer, how long would it take to get it back up?" an Enron worker is heard saying.
"Oh, it's not something you want to just be turning on and off every hour. Let's put it that way," another says.
"Well, why don't you just go ahead and shut her down."
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Tonight's Evening News will have more of the shocking Enron tapes, plus the outraged reaction from Capitol Hill.
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Officials with the Snohomish Public Utility District near Seattle received the tapes from the Justice Department.
"This is the evidence we've all been waiting for. This proves they manipulated the market," said Eric Christensen, a spokesman for the utility.
That utility, like many others, is trying to get its money back from Enron.
"They're f------g taking all the money back from you guys?" complains an Enron employee on the tapes. "All the money you guys stole from those poor grandmothers in California?"
"Yeah, grandma Millie, man"
"Yeah, now she wants her f------g money back for all the power you've charged right up, jammed right up her a------ for f------g $250 a megawatt hour."
And the tapes appear to link top Enron officials Ken Lay and Jeffrey Skilling to schemes that fueled the crisis.
"Government Affairs has to prove how valuable it is to Ken Lay and Jeff Skilling," says one trader.
"Ok."
"Do you know when you started over-scheduling load and making buckets of money on that?
Before the 2000 election, Enron employees pondered the possibilities of a Bush win.
"It'd be great. I'd love to see Ken Lay Secretary of Energy," says one Enron worker.
That didn't happen, but they were sure President Bush would fight any limits on sky-high energy prices.
"When this election comes Bush will f------g whack this s--t, man. He won't play this price-cap b------t."
Crude, but true.
"We will not take any action that makes California's problems worse and that's why I oppose price caps," said Mr. Bush on May 29, 2001.
Both the Justice Department and Enron tried to prevent the release of these tapes. Enron's lawyers argued they merely prove "that people at Enron sometimes talked like Barnacle Bill the Sailor."
Re:Oh Those Big Sillys at Enron!
All I can say is that the state of California legislature created the laws, regulations and CAISO which set the rules in regard to the supply side of the power market. The California legislature, however, refused to do anything to address the demand side of the power market (because they didn't want to risk losing low income votes if the 7 cents per kWh electric rate "subsidy" was removed). If Enron and other corporations acted within these laws and rules, and if as a result they earned a great deal of money at the expense of California by acting within the laws and rules to exploit the legislated supply and demand imbalance, in my book that is simply smart business in response to stupid legislation.
As a resident of another state where I haven't enjoyed a 7 cent per kWh power bill subsidy because my state legislature was smart enough to maintain a balance between supply and demand, I have absolutely no sympathy that Californians must now pay as much for electricity as most of the rest of us have been paying all along. If Californians want their electric rates to drop - BUILD SOME NUCLEAR POWER PLANTS IN YOUR OWN BACK YARD, and BUILD SOME NEW TRANSMISSION LINES instead of relying on overloaded existing transmission lines to bring you nuclear power from someone else's back yard in another state !
But no, California politicians can't lay the blame where it truly belongs, i.e. politically motivated power system legislation which provided "electric welfare" for California residents at the expense of the electric utility companies and their shareholders rather than the State Budget, and by the California state legislature caving in to environmentalist pressures and passing state laws making the construction of new power plants and transmission lines to keep pace with rising electrical demand impossibly complicated and expensive and unprofitable !
Instead let's go after the interstate energy companies who managed to scrounge up enough power in adjacent states to keep California's lights on most of the time. If it is true that these interstate energy companies did 'manipulate' power generation outside the state of California, this is beyond the jurisdiction of the state of California. The argument being used, i.e. that this activity was 'unethical', does not mean that it was illegal, and does not mean that California is entitled to a refund no matter how loudly this point is screamed from the rooftops by co-operative media !
I also happen to agree with the argument about price caps, which was unequivocably proven in the olden days of wage and price freezes. If prices cannot be increased to cover actual costs, shortages will result. Therefore the enacting of price caps virtually guarantees that new transmission lines and new generating facilities will not be built, and that blackouts will return. Other states pass on the actual market price on to the electricity customers instead of charging them 7 cents per kWh no matter what the market conditions as California did. Therefore if I see a power emergency in progress in my state, I have the choice of paying 25 cents per kWh to keep cool, or shutting off my air conditioner ! When enough people decide to shut off their air conditioners to avoid paying 2 1/2 times the normal electricity price, the electrical load goes down, the power emergency ends, and the price per kWh returns to normal. Supply and Demand !