- Another legacy of Enron
You must remember this: California energy crisis, Enron, power prices, FERC. I suspect a lot of it is pretty hazy at this point - especially on a Friday afternoon in late August - but today came a small bit of vindication for those who have stewed over what was clearly a market manipulation of the power system (too bad it wasn't so clear in 2000 and 2001 when California went through summertime outages). Anyway, a Ninth Circuit panel agreed that the Federal Energy Regulatory System should have considered evidence that Enron had manipulated power prices before denying a refund request. As reported by Legal Pad, the case goes back seven years and the opinion lists 27 different law firms and government agencies that submitted briefs. The decision was by Judge Sidney Thomas and joined by Judges Richard Clifton and M. Margaret McKeown.
A FERC administrative law judge dismissed the case in 2001 on the grounds that remedies aimed at the California market would cover the rest of the West. Several plaintiffs fought to keep it open, especially after the FERC released Enron documents in 2002 indicating that prices were artificially inflated. The FERC let the evidence in, though it eventually decided not to award further refunds. “FERC did not, however, respond to or take into account the new evidence of Enron’s market manipulation submitted with FERC’s approval,” Thomas wrote. That decision, Thomas said, was arbitrary and capricious. “In determining whether refunds were warranted, FERC should have considered new evidence of intentional market manipulation submitted by the parties with FERC’s approval,” Thomas wrote, before stating that the Ninth Circuit panel was not considering the merits of the claim.
You might recall that Enron CEO Ken Lay mocked the efforts of California officials by saying, "In the final analysis, it doesn't matter what you crazy people in California do, because I got smart guys who can always figure out how to make money" (sorry to speak ill of the dead, but this guy did lots of damage). Manipulation strategies were known to energy traders under names such as "Fat Boy", "Death Star," "Red Congo," and "Get Shorty". Here's what S. David Freeman, former chair of the California Power Authority, had to say about the Enron role:
"Enron stood for secrecy and a lack of responsibility. In electric power, we must have openness and companies that are responsible for keeping the lights on. We need to go back to companies that own power plants with clear responsibilities for selling real power under long-term contracts. There is no place for companies like Enron that own the equivalent of an electronic telephone book and game the system to extract an unnecessary middleman’s profits."
|
|
| 03:34 PM Aug 24, 2007 | Email the Daily Dragon | Email this Article | Post Comments |
|
|
