How did Enron, if newly disclosed records tell the story correctly, manage to rip off "poor grandmothers" in California during the 2000-2001 energy crisis in plain view of the federal agency in charge of protecting energy customers? This is an important question to answer, even if the instinct is to pile on Enron for the sleazy practices behind the company's stunning 2001 collapse.
If the government cannot regulate a single company, how can it manage an entire industry that is quickly changing how Americans buy power?
The documents are the latest salvo in a long-running court battle over whether Enron should be forced to repay customers billions of dollars. According to records released by Washington State's Snohomish Public Utility District, Enron manipulated energy prices nearly every day during the Western power crisis, shipping power in and out of the states to generate $1.1-billion in "illegal" profits.
This is the same utility that released transcripts last month that the agency said showed Enron traders gloating about manipulating the market. In one conversation, a trader asks about "all the money you guys stole from those poor grandmothers of California," to which the Enron trader responds: "Yeah, Grandma Millie, man. But she's the one who couldn't figure out how to (expletive deleted) vote on the butterfly ballot." A top manager in Portland reportedly concludes that Enron's trading practices "just (expletive deleted) California . . . to the tune of a million bucks or two a day."
Together, these records worsen the public image of what once was a pioneering company that led the shift to the market-based sale of wholesale power. The records show that Enron "manipulated" energy markets on 473 of the 537 days between Jan. 1, 2000 and June 20, 2001, when a shortage of power in the wholesale market caused major service outages and quadrupled prices.
U.S. Sen. Maria Cantwell, D-Wash., has called on the Federal Energy Regulatory Commission to open a new investigation of Enron. FERC was widely criticized for failing to respond to early alarms about Enron - a record that congressional investigators said displayed "a striking lack of thoroughness and determination" and "a shocking absence of regulatory vigilance." While many credit FERC with toughening its approach since Enron collapsed, Cantwell and many public advocates have questioned FERC's diligence and its ability to adapt as the overseer of a fast-changing marketplace.
FERC's performance in shaping just prices will always be sullied by its record on Enron. After being prodded to investigate, the commission staff found, in March 2003, "clear evidence of market manipulation in the Western markets." But what took the FERC so long, and why was the agency unable to stop the pervasive abuses as they took place throughout the marketplace? Was it incompetence or bureaucratic sloth, and what is the state of the agency now?
Bashing Enron - that's deserved, but easy. We need to explore why the federal watchdog could not prevent Enron from happening.
