Posted on 05/23/2002 9:48:53 AM PDT by Ernest_at_the_Beach
Edited on 04/12/2004 5:36:46 PM PDT by Jim Robinson. [history]
Proclaiming their innocence, California's major power generators on Wednesday outlined for federal regulators some of the ways that plant owners profited from complex twists and turns in the state's electricity markets.
Duke, Dynegy, Mirant, Reliant and Williams acknowledged their behavior shared some traits with the trading tricks detailed in Enron Corp. memos. All stressed they followed rules and did nothing wrong.
(Excerpt) Read more at sacbee.com ...
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SMUD did not take Enron up on any of its offers, said district lawyer Arlen Orchard, although the utility did engage in what he called "legitimate arbitrage," a trading practice profiting from price differences between markets.
-----Snip----
"There's more than one way to spin this," said Mike Florio, a consumer lawyer who sits on the ISO board.
"Many of these things are like right on the razor's edge," he said. "You look at it one way and you say, 'Oh, that's just legitimate financial arbitrage.' You move an nth of a degree farther and you say. 'Wait a minute, that looks pretty nasty.'"
OK so not only has Cal-ISO gamed the market, but probably SMUD. I also saw that DWR may have gamed the system prices as well. I think that when this is over Boxer and Feinstein are going to find out that they have a real mess on their hands, in that it is far more than just Enron.
Ernon (Lawfirm memo's on FERC website)
Dynergy (SEC investigation & Wall Street Journal article)
Reliant (SEC investigation & Wall Street Journal article)
Cal ISO (several Sac Bee articles and a San Jose article)
SMUD (this article)
DWR (I saw this either early today or yesterday in an article)
Puget Sound Energy (nameed in lawfirm memo's on FERC website)
PowerEx (named in lawfirm memo's on FERC website)
.....and the beat goes on....ladda dadda dee
Guess that answers the whole damn question that these guys didn't break the law, that the law was poorly written and loopholes were taken advantage of. Piss off you California whiners!
"We have a structure that is inherently so flawed that the number and scope of these opportunities is staggering," he said. The rules are loose that nothing is specifically outlawed, and there are few consequences for misbehavior, he said.
The so called "de-regulation" was nothing more than re-regulation and resulted in legal loopholes that none of the pols were able to think of. I have no doubt that if the State had gotten out of the rules making mode and let the market hold sway, there never would have been a problem.
More government is not the solution. It has NEVER been the solution - it is the problem and will always be the problem.
Obviously this person flunked math. It's "to the Nth degree" (referring to the Nth power of a number) not a fraction of a degree.
Those two, being flaming socialists, could care less about the facts of the situation. They want catchy sound bites to distract the public from the impending bankruptcy of California, nothing more.
He still has his emergency powers, and nobody in California seems to care if he violates the California Constitution, which forbids borrowing over $300,000 without a 2/3 vote of the legislature and a vote of the people.
He is, for all intents and purposes, a dictator.
Follow-up questions with respect to Enron memoranda discussing Enron trading strategies in California wholesale energy markets and California ISO sanctions for such strategies.
- Letter to Enron's Attorney dated May 6, 2002 - [pdf, 71K]
- Enron Memo dated December 6, 2000 - [pdf, 1,079K]
- Enron Memo dated December 8, 2000 - [pdf, 1,083K]
- Enron Status Report (not dated) - [pdf, 868K]
I downloaded them, only to find that my Reader 3.01 will only view the first short one. Sigh...
Take an easy example: The complaint is that some producers sold their power to someone outside of California, who then was able to sell that some power back into California, power which was exempt from a price cap.
If there hadn't been a price cap, there wouldn't have been any reason to do that, and the price that California would have paid would have been lower than it ended up actually paying, because there wouldn't have been any middleman profit.
The economic principle applies anywhere in the world. When government interferes in the markets, the markets try to adapt to get around the rules. Black markets are created, or wacky practices are done in order to skirt the government rules. Markets try to satisfy demand in any way that they can. It ends up being more expensive than if the government hadn't interfered, and the supply is always less, but the market will deliver.
Democrats, socialists, Marxists, and commies never can comprehend this simple economic truth, which is why they like regulation and government control of markets. It doesn't work well, but they never stop trying.
Two fundamental truths.
1. They will never understand (markets).
2. They will never stop trying (to regulate).
Energy bonds -- California's long-delayed plan to sell bonds to cover electric power costs is getting closer to reality, but Treasurer Phil Angelides on Thursday still couldn't say exactly when the securities may be sold. The Bloomberg report is in the Los Angeles Times -- 5/24/02
I suspect that there are some very quite and intense negotiations underway that the public and majority of the legislature will only be told about at the last moment. If that is the case, then a bond rating announcement (which often proceeds a major issue) should be happening any day unless this is a private placement with a small group of investment bankers. If that is the case, then Davis and Angelides may be publicaly charged by Simon with expanding the Oracle sole sourcing scandle to the area of sole sourcing loans for the state. Either way, I think that Simon could make a lot of political mileage out of what may be about to happen.
Simon needs to watch his back ... because Democrats play dirty.
Fortunately, I think the public is getting a taste of Davis and they don't like it, hence the 50% disapproval ratings. DUMP DAVIS!
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