27-03-2003 00:22									#1
	Feds find California power manipulation Avatar Enlargement: We've got the solution

quote: Feds find California power manipulation - - - - - - - - - - - - By Mark Sherman March 26, 2003 | WASHINGTON (AP) -- Federal energy regulators said Wednesday that their investigation found widespread manipulation of natural gas and electricity prices and supplies in California. Pat Wood, chairman of the Federal Energy Regulatory Commission, said that as a result of the manipulation California would receive more than the $1.8 billion in refunds recommended by a FERC judge in December. The exact amount is to be determined in the coming months, but FERC spokesman Kevin Cadden estimated that the total would be $3.3 billion. California is seeking $9 billion. The FERC singled out seven subsidiaries of bankrupt Enron Corp. and five other companies for taking advantage of a dysfunctional market and reaping millions of dollars in unjust profits. "The price gouging abounded," Commissioner William Massey said. He said he regretted that FERC did not intervene earlier to police the newly deregulated power market in California. California Gov. Gray Davis said the ruling confirms "there was widespread market manipulation and a massive ripoff of California ratepayers. Now the question is whether the FERC commissioners will have the grit to order the remedies that are necessary." The agency is considering placing limits on the profits of four marketers of wholesale power and banning eight gas companies from selling natural gas in California, Wood said. The power marketers are Enron Power Marketing Inc., Enron Energy Services Inc., Reliant Energy Services Inc., and BP Energy Company. The natural gas companies are Bridgeline Gas Marketing LLC, Citrus Trading Corp., ENA Upstream Company, Enron Canada Corp., Enron Compression Services Company, Enron Energy Services Inc., Enron MW LLC and Enron North America Corp. The investigation also found a close link between natural gas and electricity prices. Gas is the fuel at many power plants. After a 13-month investigation, FERC concluded "that many trading strategies employed by Enron and other companies violated the anti-gaming provisions" of marketing rules. "Enron manipulated thinly traded physical markets to profit in financial markets," FERC said, estimating that Enron made more than $500 million in online trading in 2000 and 2001. FERC investigators recommended that the companies be forced to give up unfairly earned profits. Investigators also urged the commission to consider sanctions energy companies and public utilities that sold power in California during the summer of 2000. That could further increase the amount of money owed to California since that time period is not accounted for in the refunds that already have been recommended. The commission deferred action on California's request to renegotiate some $20 billion in long-term power contracts signed at the height of the energy crisis. The three commissioners expressed sharp division over whether to meddle in the contracts, with Wood and Nora Brownell saying they would oppose the state's claim at this time. Only Massey strongly favored ordering changes in those contract. FERC also is continuing to evaluate other evidence the state has submitted to support more allegations that some energy companies withheld power in a bid to increase prices. FERC planned to make public the California evidence later Wednesday. The energy crisis cost the state as much as $45 billion over two years in higher electricity costs, lost business due to blackouts and a slowdown in economic growth, according to the Public Policy Institute of California. Shortcomings in California's energy market rules and a shortage of electricity stemming from the lack of hydropower in the Northwest in 2000 "made this fertile ground for the manipulation we found," said Donald Gelinas, who headed FERC's investigation. The regulatory agency capped wholesale power prices across the West and instituted other changes in June 2001 that brought a quick end to the energy crisis. Wood ordered an investigation in February 2002 after California officials repeatedly charged energy marketers with gouging California's utilities and its customers. Two months later, FERC obtained an internal Enron memo that described trading strategies, including sham transactions and other schemes aimed at creating congestion on the Western power grids and forcing up prices. Two former Enron traders have pleaded guilty to federal charges stemming from the trading strategies. The memo indicated that other companies had similar strategies, but provided no details. Energy companies have largely denied wrongdoing. Separately, California last week agreed to a settlement with El Paso Corp., for $1.7 billion, ending a dispute over whether the company withheld natural gas from California to drive up prices.

I TOLD YOU SO!

	27-03-2003 00:34									#2
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Breaking News from CheTV: Enron was a scam!

	27-03-2003 00:37									#3
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these are two different areas of the action of the corporation. Do you truly believe that the other corporations are clean of this?

	27-03-2003 01:15									#4
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Attached is an article from the December 2002 American Economic Review on the California power crisis. The article is written by three econ professors from Berkeley and Stanford, and is fairly technical. THe conclusions are as follows:

quote: Using data from June 1998 to October 2000 in California, we find significant departures from competitive pricing during the high-demand summer months and near-competitive pricing during the lower-demand months of the first two years. In summer 2000, wholesale electricity expenditures were $8.98 billion up from $2.04 billion in summer 1999. We find that 21 percent of this increase was due to production costs, 20 percent to competitive rents, and 59 percent to market power.

Note: All three authors have repeatedly criticized the California Legislature for partially deregulating the electricity market. Subsequent research by the authors, presented at the American Economic Association meetings in January 2003, showed that had utilities been allowed to sign contracts, the losses due to market power would have been reduced by a factor of ten.

	27-03-2003 02:45									#5
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Saying the opportunity was created by idiot legislation doesn't relieve the profiteers of guilt.
OFF WITH THEIR HEADS!

	27-03-2003 03:05									#6
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Energy trading is wrong and should be illegal. But yet, Republican legislators continue to push for such de-regulation. And Bush is buddies with Ken Lay. Another amazing coincidental connection between the Bush admin and big-oil.

	27-03-2003 05:22									#7
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quote: Originally posted by Sava And Bush is buddies with Ken Lay. Another amazing coincidental connection between the Bush admin and big-oil.

Ken Lay is also buddies with Shelia Jackson Lee.

	27-03-2003 07:49									#8
	Re: Feds find California power manipulation Enter the AD-FREE zone

quote: Originally posted by chegitz guevara I TOLD YOU SO!

I been saying this all along.

Just like my, "It's Official, Iraq is next," thread.

	27-03-2003 08:03									#9
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quote: Originally posted by Apocalypse Ken Lay is also buddies with Shelia Jackson Lee.

Is that good or bad?

	27-03-2003 08:26									#10
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quote: Originally posted by JohnT Breaking News from CheTV: Enron was a scam!

I like: "It's chelicious and nutritious!"

ACK!

	27-03-2003 08:38									#11
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I have know that since it happen. But I will not hold my breath until they repay.

	27-03-2003 08:45									#12
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Attachment: hobbes02.gif
This has been downloaded 67 time(s).

	27-03-2003 08:55									#13
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quote: Originally posted by Sava Energy trading is wrong and should be illegal. But yet, Republican legislators continue to push for such de-regulation.

Before you know it people are going to quit chopping their own firewood and instead buy natural gas to heat their homes. Oh the humanity! God will punish them, because Energy Trading is Wrong!

	27-03-2003 08:57									#14
	Re: Feds find California power manipulation Help yourself to an AD-FREE life

quote: Originally posted by chegitz guevara I TOLD YOU SO!

Yes you did. I said that most of the problem was structural, and that Davis was overstating the fraud in order to cover his a$$. I think that we were both right.

	27-03-2003 09:06									#15
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quote: Originally posted by Urban Ranger Is that good or bad?

I'm just saying that it isn't a Republican only thing.

	27-03-2003 11:58									#16
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quote: The FERC singled out seven subsidiaries of bankrupt Enron Corp. and five other companies for taking advantage of a dysfunctional market and reaping millions of dollars in unjust profits.

A dysfunctional market created by government, but does the left gripe about the government? Nooooooooo...

	27-03-2003 13:15									#17
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quote: Originally posted by Berzerker A dysfunctional market created by government, but does the left gripe about the government? Nooooooooo...

A (really) left government wouldn't have de-regulated the market in the first place or at least tight governmental control would have been necessary to prevent this. The crisis and the dysfunctional market were created by an admin. that withdrew and left the field to companies with no agenda beside money.
An anarchistic "Free Market" and a government favoring it are the responsibles.

	27-03-2003 13:24									#18
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quote: Originally posted by Wernazuma III A (really) left government wouldn't have de-regulated the market in the first place or at least tight governmental control would have been necessary to prevent this. The crisis and the dysfunctional market were created by an admin. that withdrew and left the field to companies with no agenda beside money. An anarchistic "Free Market" and a government favoring it are the responsibles.

If the market were actually deregulated into anything resembling an "anarchist" free market this crisis wouldn't have been possible. The (completely democratically controlled) California legislature instead created a scenario where shortages were assured and theft was only to be kept in abeyance by the goodwill of companies like Enron. You can see how much good that did. I sometimes think that there must have been some pretty big payoffs to the politicos from the likes of Enron, except there are so many signs of complete unfamiliarity with both the principles of economics as well as other features of human behavior in the legislation that semi-deregulated. Real thieves would have given themselves better cover.

	27-03-2003 14:49									#19
	Avatar Enlargement: We've got the solution

quote: A (really) left government wouldn't have de-regulated the market in the first place or at least tight governmental control would have been necessary to prevent this.

So California has a right wing government?

quote: The crisis and the dysfunctional market were created by an admin. that withdrew and left the field to companies with no agenda beside money.

Government intrusions into the market caused the problem.

quote: An anarchistic "Free Market" and a government favoring it are the responsibles.

How does one partially "de-regulate" a market and end up with a free market? Since when does anarchy or a free market allow for regulation in the first place? All they did was swap one set of regulations for another, and you think that makes the energy "market" free? Once again, "partial" de-regulation means the market is still regulated.

	27-03-2003 14:59									#20
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quote: Subsequent research by the authors, presented at the American Economic Association meetings in January 2003, showed that had utilities been allowed to sign contracts, the losses due to market power would have been reduced by a factor of ten.

Gee, I wonder who wouldn't let the utilities sign those contracts. Oh yeah, the California legislature that supposedly "de-regulated" the electricity market.
Of course, had the California legislature not succumbed to pressure from environmentalists over recent decades, California wouldn't have had to buy energy from other states and producers. California would have had enough power plants to produce the needed energy...

	27-03-2003 17:18									#21
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That's right! It's all the lefties fault!

	27-03-2003 17:55									#22
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The deregulation bill was written by people from the power companies. After all, as everyone says, they're the experts, while government legislators were in over their heads. The official sponsor of the bill had several people on loan from various power companies. So, yes, the government of California is to blame, but they weren't the one's who crafted the bill.

	27-03-2003 18:14									#23
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Wrong Chegitz... as with being responsible for the Russian Holocaust, "the Left" is responsible for this mess as well.

	27-03-2003 22:42									#24
	Re: Feds find California power manipulation Inflate your Upload Space

quote: Originally posted by chegitz guevara [I TOLD YOU SO!

Considering that the total hit on California was close to 50 billion, give or take a few, and initial non-government (i.e. energy consultants and analysts, but not utility types) estimates of the effects of gaming the market were up to, but no more than 7 billion, finding 3.3 billion of manipulation isn't that exciting. Gee, 93% of the problem was real market problems, and 7% was crooked scumbags taking advantage of it.

It's a lot different from the "totally manufactured crisis" line a lot of people were taking.

Berz - although it's common to slam environmentalist on power siting issues in California, it isn't entirely fair, either.

Large power consumers such as the LA basin and Contra Costa county already have large air quality problems due to the heavy industrialization, and internal routing of power plus site costs really favor out-of-area plants for economics reasons, as well.

With (at the time) lots of cheap hydro and exportable nuke power available, plus coal power from Utah, it was impossible for either utilities or non-utility generators to compete economically on power projects in California, for a good number of years, even where you had minimal environmental issues. Building a new power plant to compete in a whole sale market averaging two cents per kwh just isn't going to happen, and there was a long period of time from the late 80's to the mid 90's where California wholesale power prices averaged very close to that range.