The Enron Legacy

there were many factors that went into creating the energy disaster with which Texans are now dealing. But at least in one respect, the problems in Texas are a product of an approach to the energy business that Lone Star State companies like Enron pursued at the end of the 20th century.

wapo

Ken Lay was George Bush’s best friend, back when George Bush was governor of Texas. That was what Ken Lay would tell you, if he was still alive today. The story is more slanted now that Ken Lay has been convicted of felony crimes and his flagship business, Enron, went bankrupt and took $40 billion dollars and the fortunes of thousands with it. Also, Ken Lay is conveniently dead of natural causes, so it is easy to blame him for all of the greed that was behind the drive to deregulate the energy sector in the United States.

Enron: The Smartest Guys in the Room (book) (movie)
Movieclips Classic TrailersEnron: The Smartest Guys in the Room (2005) – Nov 20, 2013

It is because of Ken Lay’s friendship with Governor and then President Bush that the Texas and California electrical grids ended up being the mess that they are today. It’s just taken longer for Texas’ grid to fall apart than it did California’s, which has been on the ropes since Enron arranged for it to start suffering rolling blackouts back at the turn of the century.

I watched/read The Smartest Guys in the Room when the movie/book came out back in 2005. The story itself was just another nail in the coffin of my belief in market solutions, the death of my libertarian delusions. Every time that the fraudsters finally convince someone in authority to deregulate, it doesn’t take long to prove that government regulation had been there for a very good reason after all. Enron bought energy companies and then created energy markets for their power to be sold on. That was what those regulations stood in the way of, huge profits on Wall Street.

One of the last acts of desperation in the failing business that Enron became after its meteoric rise on the stock market was to turn off power generation in California’s electrical market in order to drive up the price of electricity and put money in the pockets of Enron executives and traders. Enron created rolling blackouts on purpose in order to profit from the suffering of California citizens. One of the last acts of desperation of the Texas Public Utility Commision during the recent winter storm was to set the price of electricity high enough on the Texas market to inspire power generators to turn on their excess capacity and flood the Texas power grid in their time of need. It’s just too bad that there wasn’t any capacity to be had because the power generators hadn’t bothered to insure against freezing by weatherizing their supply systems. Just too bad that electric energy generators and their investors were more interested in profiting off of the suffering of Texas citizens than they were in spending money weatherizing against winter storms that they hoped would never show up, but still manage to show up about every ten years anyway.

KUT 90.5 – Texas’ Power Grid Was 4 Minutes And 37 Seconds Away From Collapsing. Here’s How It Happened – February 24, 2021

kut.org

Shares of Macquarie rose 3.4% in Sydney on Monday after the company raised its profit outlook. They are now down 2.8% over the past 12 months.

One customer told the Dallas Morning News that his electric bill for five days stood at $5,000, the amount he would normally pay for several years of power. Another told the Dallas-Fort Worth NBC affiliate that he had been charged more than $16,000 for February.

wsj.com

It is also too bad that Texas’ hostility to federal regulation caused it to seek an isolated grid through ERCOT, which meant that most of Texas went without power when it’s isolated grid went down and no one could send it power to keep it afloat. Unless you were lucky and lived around El Paso, which (along with Amarillo and the panhandle) are not under ERCOT and consequently only saw minor interruptions in service.

This is what happens when you make the essentials for survival into profit-driven commodities; commodities that no one can understand how to profit from unless they are scarce enough to drive demand over available supply. When there is more demand than there is supply of the essentials some people won’t survive. The death toll across Texas due to the winter storm and resulting power outages is still unknown but is likely to be well over 100 people, and a bank in Australia made 200 million off of those deaths.

Texas is misnamed. Texas (tejas) supposedly means friend or ally. Nothing could be further from the truth than seeing Texas as your friend or ally. That is the ploy of the confidence man, the demand to trust him even though he seems to be oilier than all get out. The Texas mascot should be the irresponsible teen who wants to shirk all the day long because he can. It should be the grasshopper that whiles the summer away instead of storing food for the winter. Like the grasshopper and the irresponsible teen, Texas is always unprepared for adversity because of these infantile behavior patterns. Texas is a great place to be young and healthy, because there are no worries about tomorrow here, and no requirement to save anything for that day of need. Texas is a horrible place to be old or sick in because there is no place to go when you reach your hour of need. No allowance for the slackers that we pretend to be fond of, but throw out in the cold the minute that things get tough.

The true beneficiary of Texas largesse is the corporate raider, the false priest, the con artist. Texas is made for thieves. Personal and corporate greed are rewarded here, rewarded more highly than any human virtue. Just look at Ken Lay. He understood what Texas was for. He rode that pony hard and put it up wet counting on not being there when the tax man came for his cut. He died a millionaire, of the diseases of old age he could have avoided if he had straightened up and flown right. Why bother? No one gets out of this life alive.

The Enron legacy is ERCOT and every other Texas boondoggle ever hatched. Every scheme that amounted to nothing more than stealing from public coffers and crafting a golden parachute for yourself. If we had those billions that Enron stole from us, that the deregulation scheme stole from us, we wouldn’t need to go without water or power, the average Austinite wouldn’t have to be out there hand-delivering necessities to people on the verge of death during a pandemic. This lunacy has to stop. The question is, will we pay attention long enough to make it stop?

Featured image from twitter.com/austinenergy

Postscript

Governor Greg Abbott made off like a bandit after the legislative session that did not fix the Texas power grid, but not nearly as much of a bandit as one of the owners of Texas’ power generation facilities:

Winter Storm Uri cost us an estimated $293 billion in damages and some estimates put the actual death toll closer to 700. Nearly 5 million Texans lost power; many more went days without water. Remember?

One Texan who hasn’t forgotten is Dallas resident Kelcy Warren, although not because he worried that he and his family were in any danger. Warren, co-founder and now executive chairman of Energy Transfer Partners, lives in a 27,000-square-foot ivy-covered stone castle on nine acres in North Dallas. He bought his humble abode in 2009 for a reported $29 million. We can imagine that the heat stayed on in the Warren manse (or perhaps the family repaired to its private island off the coast of Honduras.)

What the pipeline tycoon remembers, we suspect, is not the nearly $300 billion that the storm cost Texas. It’s the figure $2.4 billion. As Justin Miller reports in the current issue of the Texas Observer, that’s the profit Warren’s company collected during the blackouts, a sizable portion of the $11 billion profit the natural gas industry as a whole collected by, in Miller’s words, “selling fuel at unprecedented prices to desperate power generators and utilities during the state’s energy crisis.”

Warren, a hefty donor over the years to former Gov. Rick Perry, former President Donald Trump and other Republicans, made sure that Gov. Greg Abbott didn’t forget either.

On June 23, Warren wrote out a check to Abbott’s reelection campaign in the amount of $1 million. That’s the biggest check Warren has ever given a Texas politician, according to campaign finance reports. And it’s four times the usual $250,000 gift that Abbott has gotten from his reliable Dallas benefactor nearly every year since he was elected governor in 2014.

houstonchronicle.com

This is the Enron legacy, in spades. This is what the for-profit power generation scheme that Ken Lay wanted put in place is there for. It is there to make billions of dollars for people who control access to the power of the state. We are fools to continue to allow this fraud to continue at our expense, at the possible cost of our own lives. If you vote for Republicans in Texas, you are the biggest fool of all.