During January, but especially on 17th, California is hit with electricity blackouts, as engineered (it later emerges) for predictable reasons by everyone’s favourite company, Enron. Governor Gray Davis (recall him?) declares a state of emergency.
California is to America as America is to the rest of the world. Things often happen there first. Rather than try to explain the whole tawdry shebang, this from the wikipedia page (downloaded 31st Dec 2014) gives you a taste of what went on…
As the Federal Energy Regulatory Commission FERC report concluded, market manipulation was only possible as a result of the complex market design produced by the process of partial deregulation. Manipulation strategies were known to energy traders under names such as “Fat Boy”, “Death Star“, “Forney Perpetual Loop”, “Ricochet”, “Ping Pong”, “Black Widow”, “Big Foot”, “Red Congo”, “Cong Catcher” and “Get Shorty”. Some of these have been extensively investigated and described in reports.
Megawatt laundering is the term, analogous to money laundering, coined to describe the process of obscuring the true origins of specific quantities of electricity being sold on the energy market. The California energy market allowed for energy companies to charge higher prices for electricity produced out-of-state. It was therefore advantageous to make it appear that electricity was being generated somewhere other than California.
Overscheduling is a term used in describing the manipulation of capacity available for the transportation of electricity along power lines. Power lines have a defined maximum load. Lines must be booked (or scheduled) in advance for transporting bought-and-sold quantities of electricity. “Overscheduling” means a deliberate reservation of more line usage than is actually required and can create the appearance that the power lines are congested. Overscheduling was one of the building blocks of a number of scams. For example, the Death Star group of scams played on the market rules which required the state to pay “congestion fees” to alleviate congestion on major power lines. “Congestion fees” were a variety of financial incentives aimed at ensuring power providers solved the congestion problem. But in the Death Star scenario, the congestion was entirely illusory and the congestion fees would therefore simply increase profits.
In a letter sent from David Fabian to Senator Boxer in 2002, it was alleged that:
“There is a single connection between northern and southern California’s power grids. I heard that Enron traders purposely overbooked that line, then caused others to need it. Next, by California’s free-market rules, Enron was allowed to price-gouge at will.”
And these are the institutions we are supposed to trust to help us transition to the glorious low carbon future?
See also: LIBOR, the Ford Pinto and other examples far too numerous to mention.
Other things that happened on this day:
1966 God Bless the Grass, album of “environmental” songs released
2007 In the US – “An Urgent Call to Action: Scientists and Evangelicals unite to protect creation”