Death Star and Fat Boy
The gang that looted California is coming to a state near you
Attack of the Clones opens across the country this weekend, but apparently, thanks to Emperor "Kenny Boy" Lay and the rest of those cheerful Imperial Warriors from Enron, it hit California a couple of years ago. According to internal memos released last week by the new Enron board in charge of salvaging the bankrupt company's debris, Enron energy traders were indeed manipulating the newly deregulated California energy market to drive up prices at the cost of billions of dollars to both the state and citizens of California. The traders used fraudulent maneuvers to which they gave juvenile but revealing nicknames: "Death Star," "Fat Boy," "Ricochet," and "Get Shorty." (The point of such pseudo-combat names for intra-company operations, of course, is to impress bosses and colleagues with one's mercantile ruthlessness.)
Briefly, here's how a few of the scams worked:
There were others, but you get the general idea: the only "invisible hand" in this pseudo-free market -- heavily promoted by Enron and its lobbyist allies -- was Enron's. The Enron memos also say that traders from other companies (with even larger interests in the California market) were doing the same, and now the Federal Energy Regulatory Commission says it will force them to cough up the evidence. Yet California began complaining to FERC as early as May of 1999 that the big energy companies were manipulating the market for billions of dollars. The regulators did nothing.
Where were Lay and President Bush and their energy industry fellows while California and its citizens were being looted? Blaming the victims, of course: Bush refused to meet with California senators about the problems, and according to Sen. Barbara Boxer, his VP Dick Cheney told them, "You people use too much energy." Asked about possible market manipulation last year, Lay responded, "Every time there's a shortage or a little bit of a price spike, it's always collusion or conspiracy or something. I mean, it always makes people feel better that way."
Certainly it made him and his private army of hustlers feel a whole lot better where it counts, while Californians footed the bills. And when the Houston Death Star imploded from yet other shell games, wreaking economic devastation on ordinary employees, many of the capos escaped with their shares of the staggering loot. Current estimates of the overcharges due to market manipulation in California run as high as $40 billion, and as Paul Krugman pointed out in The New York Times, "If Enron hadn't lost its clout by going bankrupt, you can be sure that we would never have heard about Fat Boy and Death Star."
Well, you know those goofy Californians -- if they didn't spend so much time fussing over clean air and water, they could've horsewhipped this whole dereg thing into cooked brisket, in no time a'tall. Certainly none of these outrages could ever happen in deregulated Texas. No sirree, Bob.
Reliability Is Our Middle Name
At least that's what we were told last week by our own lovingly named Electric Reliability Council of Texas Inc., the state's electric grid operator and the equivalent of the California agency that was so thoroughly swindled by the major power companies. Testifying before a Lege oversight committee, ERCOT's executives insisted that they have everything under control, and we needn't worry one little bit. 'Course they also admitted they hadn't quite gotten a handle yet on customer switching and new billing (they claim to be hitting about eight out of 10 right now), and they'll probably have to raise the "administrative fee" from its current average of 22 cents a month to get the whole mess sorted out. Normally, such an announcement by a state agency elicits immediate howls of legislative indignation about raising "new taxes" on the already terribly overburdened free enterprise system of Texas.
In case it's slipped your mind, Enron's Ken Lay was Gov. Bush's best buddy and largest campaign contributor, and his company the central force in the overwhelming Texas industry lobby for electricity deregulation. I don't know about you, but I have just an eensy-teensy bit of suspicion that however dereg has been designed for Texas, Enron's invisible hand is all over it. As reported by The Dallas Morning News on May 9, Rep. Steve Wolens, D-Dallas, wanted to know if the scam-generated California disaster can recur here. "I want to make sure that this is never going to happen in Texas," Wolens told the paper. "Disclosure and transparency is the best disinfectant."
I Feel Better Already
"The Public Utility Commission and ERCOT executives assured them that it could not," the Morning News wrote. That should certainly ease your mind.
Just the day before, alas, the Houston Chronicle reported that Enron "is being investigated [by the PUC] for overscheduling power last summer during a test of the deregulated market." Five other companies were doing the same thing, and then were paid by ERCOT -- i.e., us, to the tune of roughly $29 million -- to remove what we've learned to call "congestion" from the lines. Enron in particular, said the PUC, "frequently scheduled load that was more than 100 times greater than it needed to meet customer demand in North Texas." The PUC would like to tell the public more about what we're paying for, but "the company is fighting disclosure of records showing how it profited from the activity."
Welcome to the Hotel California.
Make sure to turn the lights out when you leave your room.