DescentBB

This is what you call a "smoking gun:"

Four years after California's disastrous experiment with energy deregulation, Enron energy traders can be heard â?? on audiotapes obtained by CBS News â?? 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.

http://www.cbsnews.com/stories/2004/06/ ... 0626.shtml

You know, the left took a lot of heat for the "Energy Crisis," and it can justifiably be said that the "Energy Crisis" played a huge part in the recall election of Gray Davis. Conservative publications had a field day claiming this was liberal California's own fault, and fearless leader, Herr Bush said "F U California, suck on deez nuts."

So to Enron and all these other upstanding people, ★■◆● you, ★■◆● you right in your little asses.

The blame that lies with davis was a big economic no-no: signing long term contracts during a short term price peak.

But yeah, this is fucked. I'm surprised the outrage isn't bigger, I didn't hear anything on the radio about it.

I don't get it.
When these two are talking:

"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."

It seems like they are both traders but I think they are talking about shutting down a generator which will add to the problem which in turn will help them make more money..
Were they actually getting people at the power plant to shut down for that purpose?!?
If so they should all go to jail because they knew they were stealing.

Birdseye wrote:The blame that lies with davis was a big economic no-no: signing long term contracts during a short term price peak.

I think California's real problem is simply a shortage of generation and transmission capacity. I was living in CA when they made the decision to buy a lot of their power on the spot market. At the time, spot prices may have been lower than long term contracts - but economic conditions changed and they had nothing to fall back on. So they were at the mercy of the spot market. As far as I'm concerned, the California PSC were negligent for allowing all this to happen. Of course, they'll do anything to shift the blame off themselves.

This is just more evidence showing that Enron, its traders, and the high-ranking politicians who wheel and deal in oil were having an orgy at the expense of ratepayers on the West Coast.

Another side to this story not emphasized enough is that Washington state's very own Snohomish PUD fought against the Department of Justice and John Ashcroft to release these tapes. Ashcroft and his cronies wanted to keep them sealed away and out of the public eye. How's that for protecting your ass?

Obviously, I hate Enron. And I'll believe corporate justice is a joke and white collar crime pays until I see Kenneth Lay and every single manipulative underling of his rotting pennyless in a jail cell.

They say Bin Laden wanted to hurt our country's economy by destroying the towers. I think our own economic terrorist organization - Enron - did far more than Bin Laden could have ever dreamed. And it's a shame we haven't locked them up and thrown away the key yet.

So let me get this straight. California wears a miniskirt with no panties on, goes into a biker (Enron) bar...bends over to play pool and then wonders why there is something hard trying to wiggle it's way into her goody locker. Give me a break.

Woodchip, if they had people inside the energy producing apparatus artificially shutting down the production to help cause the situation it's a whole different thing than hardball business tactics!

california wears a miniskirt? can you explain that one?

I didnt think there was anyone in the world that would possibly defend Enron's actions, but apparently, even that debacle was left vs right thing. get off it woody

Ferno wrote:california wears a miniskirt? can you explain that one?

Uh oh, Fernman's brain just died Ever hear of the word "Allegory" ?

Will, as I understand Enrons business plan, didn't they buy and sell energy contracts and not really produce energy? As such Enron was only selling and taking advantage of the scenario CA set itself up for. The problem CA had were legislative schmo's playing at the O.K. Corral with no lead in their revolvers.

Ummmm, so Zuruck....someone leaves the lions cage door open and its the lions fault for mauling the people it encounters?

this isn't the jungle or the grasslands, these are people that have families and a powerful conglomerate deliberately took advantage of them.

Woodchip, explain how this dialog between two Enron employee's fits into legal trading practices?

"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."

Wow, that's pretty amusing. Defending Enron. I love this new philosophy. Whenever an opportunity presents itself to gauge customers by shutting down and manipulating plants, while simultaneously paying off members in the government and designated auditors to keep quiet about it, it is totally legitimate corporate business. Why, just think of where this could lead!

Enron's actions are criminal. The audits that were performed were wrongfully biased since those at Arthur-Anderson who held the Enron account were just as corrupt as Enron, intentionally ignoring clear abuses by the company that audits are supposed to catch. Unlike your rose-colored view, this was not a matter of the innocent Enron finding an opportunity and exploiting it. Enron actively sought to create an environment for itself where it could commit corporate fraud without the watchful eyes of the auditors. They bribed the auditors. They bribed the government. They slept with your lord and master, Dick Cheney, who is stonewalling to protect a possible Bush connection. Hardly the lucky opportunists you make them out to be.

The system of corporation-auditor broke down in the Enron case, allowing Enron to get away with what reasonable corporations couldn't - gauging their customer base with no inquiry or investigation until it was too late.

Now, on the other hand, if you support criminal corporations, that's a whole other story.

Get your head out of your partisan butt and realize that tens of thousands of people lost their jobs, their pensions, and their ability to retire at a usual age thanks to the actions of Enron. Meanwhile, Lay who perpetrated the scheme is out their sipping exotic liquor on a foreign beach, money safely locked away in a Swiss bank account. And furthermore, short of trying to form a case against those involved, the government - led by a wealthy oil tycoon - has done little to reform corporate America. Heck, they haven't even made an example of these Enron people yet, and last I checked, no one from the MCI Worldcom scandal was incarcerated in a dimly-lit cell either.

Are you okay with this scenario? That corporations acting above and beyond the law can take advantage of a customer base, cash out when the time is right, and sleep with their auditors and high-ranking government officials to get away with it? Are you so disillusioned by your partisan drivel that you believe this is actually capitalism at its finest hour? Surely you jest.

Will Robinson wrote:Woodchip, explain how this dialog between two Enron employee's fits into legal trading practices?

"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."

We don't have the context of this dialog, specifically the status of the generating unit at that time. (When you're depending on journalists for your info, you get only the pieces that give the impression they want to create.) I worked for an electrical utitility for 14 years and the number one cause of unscheduled maintenance at a steam plant is boiler leaks. If a boiler is leaking, you can take it off line for repairs or I suppose you could still run it if your grid was in an emergency condition. So we don't know the system conditions that prevailed during that conversation. Another point is that, at least at the utility I worked for, people who managed power plants got their bonuses based on their plants availability, so it was in their interest to keep the plant running as much as possible. If this wasn't the case in CA, why did they allow it - why hire foxes to guard the chickens?

At the utility I worked for, an emergency condition never occurred because generation and transmission capacity was built to handle the load. Quite a bit of planning goes into running an electric system. There are 25 year load forecasts that are used to decide when and how much capacity to build. There are 5 year forecasts to schedule generator maintenance. There are 2 week forecasts used to optimize hydro scheduling. 1 week forecasts for unit commitment (deciding which generators to turn on, since it can take 24 hours to get a boiler hot). Then there are daily and hourly forecasts to ensure that the system has enough operating reserves - the government requires that utilities maintain a certain percentage of 'spinning reserves' (ie, headroom in the generators that are running) and '10 minute reserves' (ie, generators that can come on line quickly.)

So with all these opportunities to avoid disaster, my question is - what went wrong in CA? One thing is that environmentalists have enough clout to prevent new plant construction. Another is that during the late 90's everyone wanted to get in on get rich quick schemes, like internet stocks. In the case of CA, they gambled that the electric wholesale spot market would usher in a future of lower rates.

So who is to blame: the government/PSC whose job it is to take care of its people or companies whose job is to maximize profit? I'd say that a lot of the blame goes to CA. (btw, Enron's illegal accounting practices aren't necessarily relevant to the CA electric situation.)

Two questions:

1) In all your years in maintenence of a plant how often did commodity traders instruct someone to "shut it down".

I can't think of any context in which that statement could be the result of an innocent act *if* it was said by a trader.

2) as far as bonuses as incentive to keep it running well...do you suppose a bribe could be worth more than a bonus, and if so could that be a motive?

I realize I don't have all the facts but it sure is looking suspicious!

Well if that's the case Woody, you probably think canada wears a parka.

No, Canada wears whatever we tell them too.

Will Robinson wrote: Two questions:

1) In all your years in maintenence of a plant how often did commodity traders instruct someone to "shut it down".

During the 90's, utilities were de-regulated to allow 'transmission access' - generally speaking, if somebody wants to sell power to a utility and needs to use your transmission grid to deliver the power, then you have to let them. This move opened up an electric wholsesale market There were also 'idependent power producers' who built there own generators to sell power on the open market. A number of brokering/trading companies started who operated like a commodities market. That's some background.

As to the remarks by the trader- it was an extremely stupid question. If that guy didn't know how long it takes to cycle a steam unit, then he was most uninformed. Another thing, not only is it time consuming to do so, it's also extremely expensive to hire extra crews to get a steam plant started. It's also extra wear and tear on the equipment. The more I think about it, the less sense that little snippet of conversation makes. And presumably they knew they were being recorded. In the control center where I worked, everything was recorded in case there was a dispute over a transaction.

Will Robinson wrote: I can't think of any context in which that statement could be the result of an innocent act *if* it was said by a trader.

As I said earlier, if the unit was experiencing some technical problem that wasn't too serious, they might have taken it off line - even though doing so would have required the purchase of more expensive emergency power. In other words, if the previous statement had been, 'There's a problem at the steam plant, what should we do?', then the exchange would make more sense.

Will Robinson wrote: 2) as far as bonuses as incentive to keep it running well...do you suppose a bribe could be worth more than a bonus, and if so could that be a motive?

I realize I don't have all the facts but it sure is looking suspicious!

Yes, a bribe is possible. Yes, we don't have all the facts - at least about this incident. To me, there is no question that CA was taking on a lot of risk when they structured their utility policies. They just didn't have enough reserve capacity and got burned for it. It's like the US being so dependent on foreign oil. It's risky and a day might come when we regret it.

Ahh, thanks, that puts it in perspective a little bit. However I would think the brokers would have a responsibility to act in good faith when manipulating the plant so an artificial shut down would probably be considered an act of fraud.

Not unlike a stock broker churning an account of some unsuspecting old lady just to create more commissions.

What's in your wallet?!?

Will Robinson wrote: would probably be considered an act of fraud.

No doubt those who were paying $200/MWH for energy would consider it an act of fraud. I'm not sure about what the law is, but I figure the sellers will say there were legitimate technical reasons for operating the plants the way they did and the buyers will say that the sellers were just trying rip off CA. The local juges will rule in favor of CA out of sympathy.

De Rigueur seems to explain things quite succinctly.

Will, what I think it all boils down to is that out of 50 states, CA is the only one pissing and moaning over how the energy meanies treated them.

I dunno, I still think Davis shares some blame. I understand the problems with the infrastructure and degregulation in CA, but Davis made a bad business move for us.

Birdseye wrote:I dunno, I still think Davis shares some blame. I understand the problems with the infrastructure and degregulation in CA, but Davis made a bad business move for us.

Hey, don't get me wrong, there's plenty of blame to go around in a screw-up of this magnitude. Davis seems to have made a bad situation worse. And those Enron traders probably weren't following the Golden Rule either.