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by AI_Overlord 3739 days ago
Caused by Fraudulent Enron employees. Not because of lack of supply.
2 comments

Because of the world's dumbest attempt at privatization. Forcing utilities to buy power regardless of cost was destined to fail from day one.
It was no more, or less, "privatised" than the previous arrangement. It was just a change of regulation. A stupid change, as you noted.

Preventing utilities from hedging... how could that ever work?

No, he is correct. It was a setup that provided huge incentives to artificially limit/withdraw supply, reaping huge profits in the process. The biggest price effects were on natural gas, which affected both gas consumers and electric consumers (since much of electric supply is from gas-burning plants... including within Silicon Valley proper). There's one by my gym near San Tomas and 101, for example.

I had a gas bill of well over $350 one month for just water heating and furnace... and my thermostat was never over 62F, and on only 10 hours a day. (For local climate perspective, this is with an average overnight temperature never below freezing... it's not like the furnace was fighting blizzards.)

I saw a really good presentation on Charlie Rose by one of the main guys who was part of the electric privatization in the Mid-Atlantic States ... months if not years before the California Dereg, and he predicted it chapter and verse.

The Enron story was a great one ( even senior management could not control those traders ) but ... context. And I knew a couple guys from MCI. who had been absorbed by Enron and they weren't a part of that at all.