...California
Though the term did not enter popular use in the U.S. until the California electricity crisis of the early 2000s, outages had indeed occurred previously. The outages were almost always triggered by unusually hot temperatures during the summer, which causes a surge in demand due to heavy use of air conditioning. However, in 2004, taped conversations of Enron traders became public showing that traders were purposely manipulating the supply of electricity, in order to raise energy prices.
On December 13, 2003, shortly before leaving office, Governor Gray Davis officially brought the energy crisis to an end by issuing a proclamation ending the state of emergency he declared on January 17, 2001. The state of emergency allowed the state to buy electricity for the financially strapped utility companies. The emergency authority allowed Davis to order the California Energy Commission to streamline the application process for new power plants. During that time, California issued licenses to 38 new power plants, amounting to 14,365 megawatts of electricity production when completed.
Rolling blackouts were again imposed in late August 2005 in Southern California due to the loss of a key transmission line; the transmission line shut itself off because of a faulty sensor.
Most of California is divided into 14 power grids, each containing approximately 7% of electricity customers in the state, creating a total of 98%. The remaining 2% are placed on a separate grid, where users such as hospitals and police stations are exempt from ever having their power deliberately cut off.
In a Stage 1 emergency only a general call for voluntary conservation is issued, while a Stage 2 emergency results in power being temporarily cut off to certain large users, primarily industrial concerns, who have agreed to this arrangement in exchange for lower rates. When a Stage 3 power emergency is declared, electricity to one of the grids is shut off for a fixed period of time, which can range from 60 minutes to 2½ hours. If after this period of time the Stage 3 emergency still exists, power is restored to this grid but then the next grid in the sequence is blacked out, and so on, until the situation is stabilized — the blackout thus "rolls" from one grid to the next.
In California, each customer's electric bill includes the number of the power grid (from 1 to 14) that customer belongs to; this gives customers at least some advance notice of when their electricity might be turned off in the event of a Stage 3 emergency. The grids are set up in such a manner as to ensure that a large percentage of customers in the same neighborhood would not be blacked out concurrently, which could invite looting and other related problems. Normal electricity customers can fall within the areas reserved for emergency use (if they are near a hospital or other critical infrastructure), in which case their electric bill will indicate a power grid of 99 and they will not be affected by rolling blackouts....
Tapes Show Enron Caused Rolling Blackouts in California
Tapes Show Enron Arranged Plant Shutdown
By Timothy Egan
The New York Times
Friday 04 February 2005
EVERETT, Wash - In the midst of the California energy troubles in early 2001, when power plants were under a federal order to deliver a full output of electricity, the Enron Corporation arranged to take a plant off-line on the same day that California was hit by rolling blackouts, according to audiotapes of company traders released here on Thursday.
The tapes and memorandums were made public by a small public utility north of Seattle that is fighting Enron over a power contract. They also showed that Enron, as early as 1998, was creating artificial energy shortages and running up prices in Canada in advance of California's larger experiment with deregulation.
The tapes provide new details of market manipulation during the California energy crisis that produced blackouts and billions of dollars of surcharges to homes and businesses on the West Coast in 2000 and 2001.
In one January 2001 telephone tape of an Enron trader the public utility identified as Bill Williams and a Las Vegas energy official identified only as Rich, an agreement was made to shut down a power plant providing energy to California. The shutdown was set for an afternoon of peak energy demand.
"This is going to be a word-of-mouth kind of thing," Mr. Williams says on the tape. "We want you guys to get a little creative and come up with a reason to go down." After agreeing to take the plant down, the Nevada official questioned the reason. "O.K., so we're just coming down for some maintenance, like a forced outage type of thing?" Rich asks. "And that's cool?"
"Hopefully," Mr. Williams says, before both men laugh.
The next day, Jan. 17, 2001, as the plant was taken out of service, the State of California called a power emergency, and rolling blackouts hit up to a half-million consumers, according to daily logs of the western power grid.
Officials with the Snohomish County Public Utility District in Washington State, which released the tapes, said they believed Enron officials had taken similar measures with other power plants. This tape, they said, was proof of what was going on.
At the time, power plants in the greater West Coast grid were under a federal emergency order to keep their plants running.
A spokeswoman for Enron, Jennifer Lowney, would not comment on the tapes, citing a blanket policy of the energy trading company, which is operating under bankruptcy protection and facing multiple criminal and civil proceedings. "We continue to cooperate with all ongoing investigations," she said.
Conversations between energy traders and power plants were routinely recorded to give a record of transactions. The tapes were part of a large seizure of evidence by the F.B.I. The Snohomish County utility, which is in a court battle with Enron, obtained them through a legal action.
Previous tapes released by the district last summer showed Enron officials joking about how they were "stealing" more than a $1 million a day from California and fleecing "Grandma Millie" while bringing Enron record profits.
Other tapes released on Thursday showed Enron executives discussing their fear of going to jail for manipulating power markets in Canada and the United States. And memos showed that Enron practiced as early as 1998 to create artificial shortages and run up prices and extend the market manipulation to Canada.
Three former Enron traders have pleaded guilty to federal criminal charges of fraudulently manipulating the West Coast energy market. Enron's former chairman, Kenneth L. Lay, and former president, Jeffrey K. Skilling, are under federal indictment for fraud.
In cooperating with federal officials, West Coast traders have told how they devised schemes named "Death Star" and "Get Shorty" to make billions of dollars out of California's disastrous experiment with energy deregulation.
But until the tapes were released on Thursday, there had been few public details of how Enron set in motion the phony power shortages.
Company officials had long denied that they illegally shut down plants to create artificial shortages. In March 2001 - two months after the recording showed how the Nevada plant was shut down- Mr. Lay called any claims of market manipulation "conspiracy theories."
Memos uncovered by Snohomish County also show that Enron rewarded midlevel executives based on their performance in manipulating the West Coast market.
The tapes and memos were filed this week with the Federal Energy Regulatory Commission, as part of a broad investigation into how much money was lost by Enron market manipulation. Snohomish County is seeking to void a $122 million lawsuit by Enron over an energy contract the utility said was based on fraud.
NOVA | The Big Energy Gamble | PBS
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