Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

California: Power generators reveal practices they say were legal
The Sacramento Bee ^ | May 23, 2002 | Carrie Peyton Dahlberg -- Bee Staff Writer

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 ...


TOPICS: Business/Economy; Crime/Corruption; Extended News; Government; News/Current Events; Politics/Elections; US: California
KEYWORDS: california; calpowercrisis; davis; energytrading; powercrisis; powergenerators; tradingpractices

1 posted on 05/23/2002 9:48:54 AM PDT by Ernest_at_the_Beach
[ Post Reply | Private Reply | View Replies]

To: ;Calpowercrisis;randita;SierraWasp; Carry_Okie; okie01; socal_parrot; snopercod; quimby...
Calpowercrisis:
To find all articles tagged or indexed using Calpowercrisis, click below:
  click here >>> Calpowercrisis <<< click here  
(To view all FR Bump Lists, click here)



2 posted on 05/23/2002 9:50:20 AM PDT by Ernest_at_the_Beach
[ Post Reply | Private Reply | To 1 | View Replies]

To: Ernest_at_the_Beach; snopercod
Among them was the Sacramento Municipal Utility District, which revealed that, just days before the first rolling blackouts struck California, it had conversations with Enron traders about ways that Enron could profit by dealing with SMUD.

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.

3 posted on 05/23/2002 10:34:56 AM PDT by Robert357
[ Post Reply | Private Reply | To 2 | View Replies]

To: Ernest_at_the_Beach
The five companies that bought most of California's power plants in the early days of deregulation acknowledged a range of practices to FERC.

Sounds like they exercised their options in a free market system and juiced the consumers ...
DUMP DAVI$



GO SIMON

4 posted on 05/23/2002 10:39:40 AM PDT by NormsRevenge
[ Post Reply | Private Reply | To 2 | View Replies]

To: Ernest_at_the_Beach
Maybe somebody should make a hyperlinked list of the suspects in the gaming of the system along with the articles and source documents.

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

5 posted on 05/23/2002 10:42:12 AM PDT by Robert357
[ Post Reply | Private Reply | To 2 | View Replies]

To: Ernest_at_the_Beach
"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

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!

6 posted on 05/23/2002 10:47:05 AM PDT by Bommer
[ Post Reply | Private Reply | To 1 | View Replies]

To: Ernest_at_the_Beach
If grey out Davis wants to know why California got into the mess it did, he need look no further than this statement:

"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.

7 posted on 05/23/2002 10:50:31 AM PDT by taxcontrol
[ Post Reply | Private Reply | To 1 | View Replies]

To: Ernest_at_the_Beach
...You move an nth of a degree farther...

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.

8 posted on 05/23/2002 2:44:55 PM PDT by snopercod
[ Post Reply | Private Reply | To 1 | View Replies]

To: Robert357
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.

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.

9 posted on 05/23/2002 2:47:30 PM PDT by snopercod
[ Post Reply | Private Reply | To 3 | View Replies]

To: snopercod
Speaking of the coming bankruptcy, it is almost June (which means its almost close to the end of June and the end of the California fiscal year) and typically bond issues take 30 to 60 days to close after sales, shouldn't the state be issuing warrants, bonds, notes, or something pretty soon? If not, they may be in a world of hurt.
10 posted on 05/23/2002 9:08:12 PM PDT by Robert357
[ Post Reply | Private Reply | To 9 | View Replies]

To: Robert357
I think Davis has something up his sleeve.

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.

11 posted on 05/24/2002 3:42:15 AM PDT by snopercod
[ Post Reply | Private Reply | To 10 | View Replies]

To: Robert357;Dog Gone;okie01;randita;abwehr
Speaking of the now-infamous Enron Memos, here are the links from the FERC website:
Follow-up questions with respect to Enron memoranda discussing Enron trading strategies in California wholesale energy markets and California ISO sanctions for such strategies.

I downloaded them, only to find that my Reader 3.01 will only view the first short one. Sigh...

12 posted on 05/24/2002 4:22:57 AM PDT by snopercod
[ Post Reply | Private Reply | To 5 | View Replies]

To: Ernest_at_the_Beach
It cannot be stressed enough that none of these practices would have occurred if California had deregulated their markets.

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.

13 posted on 05/24/2002 7:34:23 AM PDT by Dog Gone
[ Post Reply | Private Reply | To 1 | View Replies]

To: Dog Gone
"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).

14 posted on 05/24/2002 8:52:33 AM PDT by okie01
[ Post Reply | Private Reply | To 13 | View Replies]

To: snopercod; gophack
You may be right about his having something up his sleeve via emergency powers. However I saw the following in Rough & Tumble summarized today.

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.

15 posted on 05/24/2002 9:16:23 AM PDT by Robert357
[ Post Reply | Private Reply | To 11 | View Replies]

To: snopercod
I downloaded the Ernon memos myself and my jaw dropped when I saw the Stoel Reves letterhead, as I know a number of their energy attorneys. I have talked to some other law firmes in the area that specialize in electric power law and they are just greatful that none of their memo's are on a FERC website. This is not the best publicity for that firm.
16 posted on 05/24/2002 9:20:00 AM PDT by Robert357
[ Post Reply | Private Reply | To 12 | View Replies]

To: Robert357
You may be right ... there is a lot of closed lips, lying, manipulations, and fraud that the Davis Administration is involved in. Gray Davis is my most corrupt politician I have ever known about. He's worse than Bill Clinton. Clinton liked power, but more than that he liked pleasure. Davis is about one thing and one thing only: ABSOLUTE POWER.

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!

17 posted on 05/24/2002 9:37:36 AM PDT by Gophack
[ Post Reply | Private Reply | To 15 | View Replies]

To: Bommer
Doesn`t matter anymore if something is immoral,unethical,sleezy as long as it is legal.
18 posted on 05/24/2002 9:44:47 AM PDT by philetus
[ Post Reply | Private Reply | To 6 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson