Matthews let energy industry rep spin 2000 Calif. blackouts as "a lack of generation"; ignored Enron's market manipulationSeptember 13, 2005 4:50 PM EDT ››› SIMON MALOY
In discussing blackouts that affected portions of Los Angeles on September 12, energy industry representative Jim Owen attributed California's energy crisis in 2000 and 2001 to "a lack of generation." On the 5 p.m. ET September 12 edition of MSNBC's Hardball with Chris Matthews, Owen claimed that there were "not enough power plants that were in the state back then and inadequate transmission facilities." Host Chris Matthews did not challenge Owen's assessment, despite reports that market manipulation by the Enron Corp. was a key factor in California's surging energy prices and rolling blackouts in 2000 and 2001.
Owen works in "Media Relations" for the Edison Electric Institute, which describes itself as "the association of United States shareholder-owned electric companies, international affiliates, and industry associates worldwide."
From the 5 p.m. ET September 12 edition of MSNBC's Hardball with Chris Matthews:
MATTHEWS: Of course, I've got to go to Jim Owen on the tricky political question. Gray Davis, the recent governor of California, owes his dismissal by the people to questions and problems they had with regard to energy. Does this relate to that? What's going on now in L.A.?
OWEN: I would tend to think that this is not really related to that, Chris. It's premature to try to make any sweeping generalization, political or otherwise, but it would appear, based on what we've heard and what your own network has reported, that this appears to be a relatively localized cause of an outage that again, for reasons that we discussed, obviously spread throughout a densely populated political -- excuse me -- a densely populated area. The problem that you alluded to earlier, back when Gray Davis was governor, really had to do with a much more complex and broader set of factors having to do with a lack of generation. In other words, not enough power plants that were in the state back then and inadequate transmission facilities. Some of those dynamics still apply. I mean, there are many people who still feel that there are not enough power plants in California, and while they are certainly trying to redress some of the issues relative to transmission -- to power lines -- you know, they still have some way to go there too. But I think things are certainly better than they were back then.
MATTHEWS: Jim Owen. Thank you very much for joining us from the Edison Electric Institute, and you represent all those power companies, those utilities, including Los Angeles.
Notably absent from Owen's explanation of the 2000 California energy crisis is the widely reported role of Enron, which went bankrupt in December 2001. According to a July 16 Los Angeles Times article, Enron "played a key role in the yearlong market meltdown that brought record prices and rolling blackouts to the customers of Southern California Edison Co., Pacific Gas & Electric Co., and San Diego Gas & Electric. Enron's traders devised schemes with such names as 'Fat Boy' and 'Death Star' to manipulate the energy marketplace in California and other Western states -- behavior captured in well-publicized recordings of company employees gloating over the plight of 'Grandma Millie' and other hapless ratepayers."
A February 4 San Francisco Chronicle article reported that "the company used elaborate trading schemes to create the appearance of power shortages in some cases and congested transmission lines in others." According to the Chronicle, "Phone transcripts show Enron searching for reasons to shut down one of its power plants during the height of the California energy crisis, eventually closing the plant as blackouts rippled across the state. ... One transcript includes an Enron trader, identified by the utility district as Bill Williams, calling an operator at the company's 52-megawatt Las Vegas power plant on Jan. 16, 2001, and asking that it be taken out of operation the following day. 'We want you guys to get a little creative ... and come up with a reason to go down,' he says in the transcript." Enron manipulated the California energy market (decreasing the energy supply during periods of high demand) in order to, as Time put it on May 20, 2002, "squeeze cash out of energy hungry California," and generate "maximum profit regardless of the effect on consumers."