Get Tough on Energy Cheats
The flippant conversations of energy company employees caught on tape just weeks before the California energy crisis exploded underscore the painfully obvious: Energy-generating and trading companies used deception, half-truths and outright lies to rig the power market and boost corporate profit.
The telephone recordings -- in which Williams Cos. employees seem well aware that generating plants were being taken offline just to raise prices -- are described in a troubling Federal Energy Regulatory Commission report released Friday. The recordings illustrate why federal regulators must abandon the hands-off policies that allowed the California energy meltdown -- and could easily allow another one.
Energy company executives and federal regulators ridiculed Gov. Gray Davis last year for describing energy traders as “gougers” and “pirates.” But it’s increasingly simple to connect the growing number of dots to prove Davis right.
Start with in-your-face trading schemes with such names as Death Star and Fat Boy that energy traders used to manipulate the markets. Consider the lawsuits California and Nevada recently filed against natural gas companies for allegedly restricting supplies in order to push up energy prices.
Think of the Enron Corp. trader who on Oct. 17 pleaded guilty to conspiring to inflate power prices. Keep tracking the federal grand jury investigation into the energy crisis that already has produced subpoenas for Williams, Enron, Dynegy, Duke Energy and other energy traders.
Go online (www.ferc.gov) and read the troubling report that chronicles conversations a Williams employee had with a power plant operator about methods of boosting profit. The conversations describe the long plant shutdowns and continuous repairs as “weird,” “pretty wild” and “kinda interesting.”
As the paper trail grows, so does the list of highflying energy trading companies that have crashed. Pacific Gas & Electric’s energy trading operation is on the ropes. El Paso Corp., Dynegy and Williams are eliminating or cutting back their trading arms. One electric industry observer quipped that “it’s like economic McCarthyism out there: ‘I am not now nor have I ever been an energy trader.’ ” What may also be true is that stand-alone energy traders can’t make money in an honest market.
But identifying the villains isn’t enough. California has to build more power plants and fix its flawed attempt at deregulation. Prosecutors must continue to track down those who manufactured the crisis. FERC should be active in policing the power industry and vigorously help California get refunds for expensive, long-term power contracts that were negotiated while the state was in the stranglehold of cheaters.
Now that would be kinda wild.
