Memo Describes Enron Role in Calif. : LUSENET : Unk's Troll-free Private Saloon : One Thread

Memo Describes Enron Role in Calif.

Tue May 7, 9:31 AM ET

By MARK SHERMAN, Associated Press Writer

WASHINGTON (AP) - Enron Corp. drove up electricity prices during California's energy crisis, using names like "Death Star" and "Ricochet" to describe strategies that aimed to cash in on the power shortage, company documents show.

A memorandum, written by Enron lawyers in December 2000, outlined practices similar to those described by California officials who allege the energy trading company created phantom congestion on electricity transmission lines and engaged in sham sales among its affiliates to increase electricity prices.

Describing one such strategy called "Death Star," the lawyers wrote: "The net effect of these transactions is that Enron gets paid for moving energy to relieve congestion without actually moving any energy or relieving any congestion."

Another practice, called "Ricochet," allowed Enron to send power out of California and then resell it back into the state to avoid price caps that applied to transactions solely within California.

"To us, this is really the smoking-gun memo," said Sean Gallagher, a staff attorney with the California Public Utilities Commission (news - web sites). "It's Enron's own attorneys admitting that Enron is manipulating the California market."

Enron turned over the documents to the Federal Energy Regulatory Commission (news - web sites), which made them public Monday.

Steve Maviglio, a spokesman for California Gov. Gray Davis (news - web sites), said the memos are more evidence that federal energy regulators should order power companies to refund billions of dollars in exorbitant electricity sales.

Sen. Dianne Feinstein, D-Calif., asked the Justice Department (news - web sites) to open a criminal investigation into Enron's possible manipulation of the state's electricity market.

"My suspicions have been high for some time that Enron was fraudulently manipulating the California energy market for its own benefit," she said in a statement. "I am asking Attorney General John Ashcroft (news - web sites) to pursue a criminal investigation to determine whether in fact federal fraud statutes or any other laws were violated by Enron."

Justice Department officials could not immediately be reached to comment.

The Federal Energy Regulatory Commission has been investigating whether Enron either took advantage of or helped spark the crisis in California's newly deregulated power markets, in which wholesale power rates jumped tenfold, three investor-owned utilities faced financial ruin and Californians experienced rolling power blackouts. Enron has denied any role in the crisis.

The company provided the memo to the commission along with a later, undated report from other Enron lawyers that took issue with the first memo. FERC posted the memos on its Web site, along with a letter to Enron seeking more information about the company's electricity and natural gas trades in California and other Western states.

Robert Bennett, a Washington attorney representing Enron, said the memos became known 10 days ago and could easily have been kept confidential. The reports were addressed to Richard Sanders, Enron's vice president and assistant general counsel, to prepare for investigations and lawsuits resulting from the California situation.

"Current management decided the responsible thing to do was to release the documents," Bennett said.

Questionable accounting practices helped drive the company into bankruptcy last year and resulted in the sale of the energy trading unit at the center of the California allegations. "It's virtually impossible for us to determine the accuracy or inaccuracy of these memoranda," Bennett said.

-- (Dubya's@criminal.friends), May 07, 2002


"Robert Bennett, a Washington attorney representing Enron,"

Is this the same Robert Bennett who represented Clinton?

-- (Clinton's@sleazy.friends), May 07, 2002.

Is this the same Robert Bennett who represented Clinton?

Yep. But you weren't supposed to notice that. :)

-- Stephen (, May 07, 2002.

And the point of bring up Bennett is to do what exactly? Change the attention away from the topic of this thread? What does it matter if it is the same Bennett? Is pointing that out an attempt to imply some vague connection between Clinton and what Enron has done?

Do you have anything to say about the documentation coming out proving Enron caused the California energy crises which the Bush administration used to justify it's "energy policy" which gives huge financial benefits to the energy companies who contributed so heavily to the administrations political campaign and who, for all intents and purposes, dictated the energy policies put forth in the "energy Plan".

-- Cherri (whatever@who.cares), May 08, 2002.

A good attorney represents any client, regardless of what their political affiliation is. The first two conservative sleazebags who responded to this thread are too ignorant to realize this because that's not the way they learned play the game. Like Dubya's friends at Enron, they normally bribe someone who is willing to lie and cheat so that "their side" will win.

-- lol (forgive them @ they don't. know any better), May 08, 2002.

Where's all the rightwing anti-conspiracy idiots who mocked those last summer who suggested that the energy crisis was a scam?

ROTFL! They are strangely silent now!

-- (stupid@ass.cowards), May 08, 2002.


The point, delivered with a little 'yumor, is that the Democrat's attempts thus far to make the terms "Enron" and "Bush" synonyms are one big, bad joke. The public hasn't bought it and isn't going to buy it. Even Carville and Begala have given up on that angle, because it's not going anywhere.

Of *COURSE* Enron is guilty of all sorts of shennanigans. And I'm not the least bit surprised to find out that they manipulated things in California.

And for everything that Enron did that was illegal, they (and specifically, their executives) should be hammered. I've said that all along.

What's a stretch is this continued (desperate) attempt to link all of Enron's foibles to the Bush administration, when there are just as many ties between Enron and the Democrats.

Just as many. This has been *documented.* And in fact, the reason why the *smarter* Democrats have quietly dropped Enron as an issue vs. the Bush admin is because they DON'T want too much scrutiny of the thing, or the mud is going to start hitting THEIR windshields, too. :)

But we've been over that before, haven't we? No need to rehash it.

-- Stephen (, May 08, 2002.

Steven, I don't agree about the "just as many."

Consider one case, which really stands out in my mind. When Califoria was desperate (people losing jobs, businesses going under), Cheney was interviewed on television and defended the lack of action to rein in the incredible prices being charged for electricity, by saying that curbing prices would not bring a normal balance between supply and demand into being one iota sooner.

That is an absolutely true statement. It is also a totally irrelevant statement.

What is relevant is that a reasonable ceiling for electricity prices, as astoundingly high as they were, would not have delayed this normal balance one iota.

-- Peter Errington (, May 08, 2002.

I had heard that Hawaii hasn't learned from the mishaps of CA legislatures to control prices. They now have told the gas companies that they cannot charge market prices for gasoline but rather cannot charge above a certain price. The companies will just take their products elsewhere and Hawaii will be left with nothing. Or even worse, the rest of the country will end up paying higher prices because of the profit loss in selling to Hawaii. Sad the idiot liberals never learn.

Cherri to the posted article I say, SO WHAT? Yes, we all know that Enron was bad, a very bad boy! Now lets spank them and get over it.

-- Maria (, May 08, 2002.

"Yes, we all know that Enron was bad, a very bad boy! Now lets spank them and get over it."

"Lets spank them and get over it"?? LOL, what a dimwit!!

-- thanks (, May 08, 2002.


You can't just look at California or Cheney's ties to the energy industry. I'm looking back through the Clinton administration, too, and all the sweetheart deals and ties that *HIS* people had to Ken Lay. That was my point: yes, Enron was bad. Yes, Enron ran amok. But trying to make this a "Bush scandal" is something of a stretch, and most people know it.

(Most importantly, the press has known it for some time, which is why they have refused to serve as a mouthpiece for Terry McAuliffe's propoganda about Enron.)

(Even ignoring the fact that McAuliffe has his OWN skeletons in the closet.[g])

Consider one case, which really stands out in my mind. When Califoria was desperate (people losing jobs, businesses going under), Cheney was interviewed on television and defended the lack of action to rein in the incredible prices being charged for electricity ...

OK, but where's the link to Enron? This is *precisely* what I'm addressing.

You can *assume* a link here because (a) Enron engaged in bogus activities in California and (b) Cheney made this statement. But since Cheney is a conservative who believes in free markets to start with, it's hard to conclude that he wouldn't have said the exact same thing if Enron had never existed.

What would be surprising is if Cheney had *supported* price controls. That would have made me very suspicious, and I WOULD have looked for a link.

To give you an idea, Enron wanted *very* badly for ANWR *NOT* to be developed for oil, because it would hurt their business. The Bush administration told them no, it was a matter of national security to reduce our dependence on foreign oil by all means possible.

Here, once again, if the Bush admin had agreed, and had *refused* to develop ANWR, that would have been very suspicious to me. Why the sudden change in policy? In fact, I would take that as evidence of collusion, you'd better believe it.


Unless Hawaii gets its mind right, and fast, look for gasoline shortages there by summer. Sure as death, sure as taxes. And they will be baffled about why it happened, too, just as sure.

Some people never learn.

-- Stephen (, May 08, 2002.

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