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American Morning

FERC Investigating Enron to See if It Manipulated Energy Prices in California.

Aired February 14, 2002 - 09:34   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, CNN ANCHOR: The Federal Energy Regulatory Commission said it's investigating Enron to see if it manipulated energy prices in California.

You will recall in the days of Enron's collapse. Energy futures in the Golden State dropped by about 30 percent. And you also recall in the heat of last summer, California suffered an energy crisis that resulted in rolling blackouts and huge increases in the cost of energy. So it's probably no wonder Californians are a bit hot under the collar at reports Enron may have been behind all of that as well.

Here's CNN's James Hattori.

(BEGIN VIDEOTAPE)

JAMES HATTORI, CNN CORRESPONDENT (voice-over): It seemed like such a good idea when Californians threw the switch on electric power deregulation four years ago, a plan Forged earlier by state lawmakers and encouraged by big power companies, including Enron. Then last year, the plug fell out. Seven days of rolling blackouts heralded the great California energy crisis.

UNIDENTIFIED FEMALE: I can't imagine that they would allow businesses to be turned off in the middle of the day.

HATTORI: The causes, a regional power shortage, lack of new plants on top of a deregulated system that let power companies shut down plants for maintenance at-will and charge sky-high market prices.

PROF. DANIEL KAMMEN, UNIV. OF CALIF.-BERKELEY: Last winter 35-40 percent of power plants were magically off-line, and off-line all at the same time, and if that's not a smoking gun for collusion. Nothing else is.

HATTORI: But almost as quickly as the crisis began, it faded. Predictions that California would suffer 40 days of blackouts during the summer were wrong, thanks to conservation and moderate weather.

KAMMEN: California partially got lucky, and California citizens saved the day.

HATTORI: Still, deregulation considered a failure in California. Governor Gray Davis has been trying to deflect any guilt, even though he wasn't in office when the law was passed. The big power companies are being investigated, but insist they didn't do anything illegal.

UNIDENTIFIED MALE: I wonder what happened to the energy crisis though, I really do.

HATTORI: Now California is trying to fix the system, building new plants, renegotiating contracts, despite Enron CEO Ken Lay, who once reportedly joked that the difference between California and the Titanic is that the Titanic went down with the lights on.

James Hattori, CNN, San Francisco.

(END VIDEOTAPE)

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