Federal regulators condemned energy companies for past market manipulation Wednesday and started pursuing sanctions against several of them for their roles in the 2000-2001 California power crisis.
All of the Enron-related companies that are mentioned in the report are in bankruptcy, so any effort by the state of California to get refunds from the companies will need to go through a U.S. bankruptcy court in New York.
The commission also signaled that it probably will not force energy companies to renegotiate more than $20 billion in long-term power contracts California agreed to when natural gas and electricity prices soared to record levels in 2000 and 2001.
The report also says that Enron could not have done the transactions that allowed it to manipulate the markets without the help of other parties, such as municipal utilities that would buy or sell power at Enron's request to create certain conditions.
The report also refers to a handbook that Enron had for employees. The handbook had directions on which counterparties to call in certain market situations so that the counterparties could take advantage of the conditions.
Did I understand that right? Enron couldn't have pulled the manipulations off without the help of municipal utilities — "counterparties" — that were in on the scheme.
This vast right-wing conspiracy even had a market manipulation handbook of phone numbers to call to move the market in this or that direction. The laissez-faire "unseen hand of the marketplace" was rooting around in California's pockets — and removing $45 billion in one fell swoop.
Meanwhile, the beneficiary of all that Texas energy industry largesse was a certain George W. Bush, who had this to say about the California energy crisis during a White House press conference on March 29, 2001 (shortly after Cheney's six secret energy meetings with Enron): "We need a full affront on an energy crisis that is real in California and looms for other parts of our country if we don't move quickly."
Language mash-up aside, there are several things wrong with this statement. One, the energy crisis in California was not real. Two, the energy crisis was engineered by his campaign contributors and personal friends. Three, it is a bad idea to extrapolate from a phony situation concocted by cronies to create scenarios of looming crisis for the rest of the country.
The energy crisis wasn't real, but the "full affront" is quite real — and it's on us.
Enron, although one of the most egregious, wasn't the only company identified by the FERC. The others include Reliant, BP, Dynegy, El Paso, Williams, Duke, Mirant, CMS and Coral.
UPDATE:bad things once again comes through with the telling detail. None other than the Los Angeles Department of Water and Power and several smaller municipal utilities were involved in "Death Star," a ploy of scheduling nonexistent energy transmissions to create the appearance of congestion so that utilities and power generators could collect payments to relieve it. Go read the whole post. Bonus points if you catch the phrase "bad thing" in the cited text.