You are here

Southern California Edison

Enron Played Central Role in California Energy Crisis

Greg Palast and Robert Bryce interviewed by Amy Goodman - Democracy Now, May 16, 2006

[in 2001] California was plunged into an unprecedented energy crisis. Rolling blackouts shut down parts of the state. Power bills soared. It turned out that at the center of the crisis was Enron — although the company’s role wasn’t fully understood at the time. We play excerpts of audiotapes that proved Enron asked power companies to take plants offline at the height of the California energy crisis–in order to make more money.

AMY GOODMAN: In California, the state’s former governor Gray Davis praised the jury for convicting Ken Lay and Jeffrey Skilling. David said, quote, "Given the way Enron ripped off California, I think the jury did an excellent job. I take some solace in the fact that Lay and Skilling be will send some time in prison," he said. Six years ago, California was plunged into an unprecedented energy crisis, rolling blackouts shut down parts of the state, power bills soared. It turned out that at the center of the crisis was Enron, although the company’s role wasn’t fully understood at the time. Two years ago, lawyers involved in a lawsuit in Washington state obtained audio tapes that proved Enron asked power companies to take plants offline at the height of the California energy crisis, in order to make more money. In one taped phone call, an Enron employee celebrated the fact that a massive forest fire had shut down a transmission line carrying energy into California, causing the price of energy to rise.

California's Energy Crisis: Structural adjustment - American style

California's Energy Crisis: Power to the People?

By Jessie Muldoon and Todd Chretien - International Socialist Review, February-March 2001

THE LIGHTS are out in California. Rolling blackouts have cut electricity to millions. Only this time, it's not the San Andreas Fault that's to blame. It's the free market.

A year ago, electricity cost roughly 3.5 cents per kilowatt-hour on the wholesale market. Today, that same amount costs upward of 40 cents. Why? Back in 1996, energy companies and big businesses showered millions of dollars on California politicians, convincing them to vote unanimously to "deregulate" the publicly owned and managed state electrical utility system. The state would no longer set prices and supervise the industry. In exchange, the energy companies promised Californians lower prices and cleaner power brought on by free-market competition.

Instead, a handful of energy profiteers have made a killing, while millions of Californians suffer higher rates and the harmful effects of power outages. The results of the power crunch have been devastating to ordinary people. Nathaniel Goodwin, who is 73, has emphysema and needs an electrical oxygen concentrator to breathe. As rolling blackouts spread across California, he stocked up on crackers and peanut butter, arranged for a battery-powered backup, and hoped for the best. "I live by myself and I've got to have my oxygen," he told a reporter.1

"We've got elderly folks with arthritis who have to have heat. Many of them have medical devices they need to live and no one knows what will happen when the electricity is turned off," said Marie Harrison, a community leader in the Bay View Hunters Point district of San Francisco, which is predominantly Black.2

The utility companies claim that hospitals and fire stations will not be affected by the blackouts, but two hospitals--Valley Convalescent Hospital in Watsonville and Community Medical Centers in Fresno--suffered outages. Across the state, workers are paying the price for deregulation. California Steel Industries of Fontana, the largest steel plant on the West Coast, sent 400 workers home without pay because of skyrocketing electrical costs. The Miller Brewing Company plant in Irwindale laid off its whole workforce for a week without pay.3

Schools have lost power or have been forced to cut back on heat, leaving tens of thousands of children shivering in the dark. Contrary to popular belief, temperatures during California winters often hover between 40 and 50 degrees, and few buildings have proper insulation. Meanwhile, the crisis shut down some of California's biggest oil refineries, which could quickly lead to a substantial hike in prices at the pumps. A dairy farmer put it this way: "This problem has the potential to be substantially more devastating than any earthquake we've seen."4

One economist estimated that the state lost $1.7 billion in wages, sales, and productivity in just one week of blackouts.5 And there is no end in sight. The Independent System Operator (ISO), the state-appointed agency that controls the California power grid, warned that Californians should get used to rolling blackouts for at least the next two years.6

This article explores how deregulation and the free market are behind the crisis, and why we should fight for public power as a solution.

The Fine Print I:

Disclaimer: The views expressed on this site are not the official position of the IWW (or even the IWW’s EUC) unless otherwise indicated and do not necessarily represent the views of anyone but the author’s, nor should it be assumed that any of these authors automatically support the IWW or endorse any of its positions.

Further: the inclusion of a link on our site (other than the link to the main IWW site) does not imply endorsement by or an alliance with the IWW. These sites have been chosen by our members due to their perceived relevance to the IWW EUC and are included here for informational purposes only. If you have any suggestions or comments on any of the links included (or not included) above, please contact us.

The Fine Print II:

Fair Use Notice: The material on this site is provided for educational and informational purposes. It may contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. It is being made available in an effort to advance the understanding of scientific, environmental, economic, social justice and human rights issues etc.

It is believed that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have an interest in using the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. The information on this site does not constitute legal or technical advice.