Enron blamed for Californian blackouts

7 October 2002 – A British media investigation has revealed documents that show how US energy firm Enron manipulated the Californian electricity market, leading to the price volatility which was blamed for the blackouts experienced in 2001.

Radio 4’s File on 4 programme has obtained internal memorandums from Enron’s lawyers which show that Enron bought large blocks of electricity which they had no intention of using. By making the bulk purchases, Enron forced electricity-grid controllers to pay it multi-million dollar incentives to reduce orders so the grid could cope.

Enron’s actions sent prices fluctuating wildly but netted them tens of millions of dollars through the schemes, given names such as Death Star. One of the internal documents said, “The company is effectively increasing the costs (of electricity) . It can often be profitable to sell power at a loss simply to be able to collect the congestion payment.”

California experienced six blackouts early last year, which caused chaos in hospitals and plunged thousands of homes into darkness.

The outcome of the radio station’s investigations is to be broadcast in full on Tuesday at 8pm.

No posts to display