TV SHOW: The Nightly Business Report
HOST SUSIE GHARIB: California’s biggest energy companies say that they didn’t manipulate the state’s power market last year. The firms are telling state officials their behavior was legal and they played according to the rules of California’s electricity markets, but not everyone agrees. And some memos released by Enron last month could prove troublesome for other energy companies.
Pat Anson has the latest from Los Angeles.
PAT ANSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Consumer activist Harvey Rosenfeld says the Enron memos prove what he’s been saying all along, that energy prices on the West Coast were being manipulated.
HARVEY ROSENFIELD, FOUNDATION FOR TAXPAYER & CONSUMER RIGHTS: These are the devastating exhibits that, you know, no defendant ever wants to have see the light of day. Enron traders were conspiring with other traders at other companies and that’s a violation of the antitrust laws.
ANSON: The Enron memos outline several tactics used by Enron traders. Gaming strategies were developed to raise prices on the stock market and phony periods of congestion were created on power lines to limit supplies. According to the memos, everybody does this. And two Enron competitors, Williams (WMB) and Power X were likened to hogs at trough. Both companies have denied manipulating prices. In a letter to one of its trading partners, El Paso Electric (EE), Enron executives thank and congratulate the company for taking full advantage of the market by selling high priced electricity during a heat wave.
ROSENFIELD: And I was surprised that they put it in writing. It’s an indication of how brazen they were in the deregulated environment that they were operating in that they didn’t have any compunctions about, you know, sending a thank you note for help in, you know, creating a shortage here in California and in manipulating the supply of electricity.
ANSON: In a statement to NIGHTLY BUSINESS REPORT, El Paso Electric said its aim was to get the best possible price for power. However, in light of recent questions and allegations about Enron trading practices, the utility is now reviewing all available records documenting its business relationship with Enron. Those documents are being turned over to federal regulators.
California’s attorney general claims the Enron memos are proof of manipulation and is asking regular to ordered billions of dollars of refunds for California consumers. Some want the state to go further and refuse to honor high priced contracts that were signed with generators last year.
PETER NAVARRO, ECONOMIST: There’s strong evidence right now that the $43 billion in long-term contracts that the governor signed at the height of the panic can and should be just rendered null and void. There was a conspiracy all along to manipulate this market. It was never Enron alone. Enron just happens to be the one that got caught.
ANSON: It’s been over a year now since California has faced any blackouts. Last year’s shortage turned into a surplus and forecasters say the state should have ample supplies of electricity this summer.
Pat Anson NIGHTLY BUSINESS REPORT, Los Angeles.