"American Greed" and the Enron Story

Last night's CNBC show, "American Greed", detailed the unravelling of Enron. 

Enron's obvious (but to me, puzzling) hatred for anything California got me thinking back to when California owed B.C. Hydro money for electricity. 

I didn't know anything about Enron back in 1985.  Apart from its very public collapse in 2001, I was frankly amazed at the sheer depth of fraud and corruption--orchestrated by its principals--brought to light since then. Fortunately, my family didn't own Enron stock.  But you can bet YOUR bank did!

Take the quiz and see what you knew.
Very little, I bet, just like me.
Proof of duplicity in lurid and fraudulent corporate machinations even led to the dissolution of the previously highly-respected accounting firm of Arthur Andersen.

Wikipedia sums it all up, if not nicely.

The TV show reminded me that I had been interested in whether California had ever repaid B.C. Hydro, especially since B.C. residents were facing a 7.23 increase in rates, the first of many.

At the time, it was reported in the media that up to $400 million was owed.
So I questioned B.C. Hydro.

The following is the reply I received from B.C. Hydro rep Elisha Moreno, dated March 18th, 2004:

"Thanks for writing to us about where this proceeding is at - Powerex is still owed approximately US$280 million by the California Independent System Operator (CAISO) and the California Power Exchange (CalPX). However, at the same time, FERC has ordered an across-the-board recalculation of California market prices for the period of October 2, 2000 to June 19, 2001. This recalculation will result in refunds to California by some market participants, including Powerex. Any refunds ordered are not in relation to any alleged market manipulation, but in recognition of the fact that the California market was "broken", resulting in extremely high power costs for California during the state's energy crisis.

The exact amount of refunds Powerex will be ordered to pay is currently unknown. At FERC's direction, the CAISO is now recalculating prices, which in turn will determine the amounts owed to and by each market participant based on a certain pricing methodology. These amounts are expected to be issued by the CAISO in the next 6 months, with refunds being offset against outstanding receivables.

Regardless of the amount Powerex has to refund, there will be no negative impact on BC Hydro's bottom line. We have already accounted for the vast majority of the money that's owed us, so any money we get back is a positive for our bottom line. It is also important to remember that we generated significant revenues from energy sales during the energy crisis, therefore this outstanding amount is unrelated to the coming rate increase.

I'd like to remind you that we have not had a rate increase in more than 10 years, since 1993. The reason we are seeking a rate increase is two fold, the need for energy is growing and new sources of electricity will cost more than our existing Hydro resources, and our infrastructure to make sure that energy is reliably delivered to you, is aging and in need of upgrades or replacement. As BC Hydro has absorbed all the costs incurred since 1993, in order to assure secure reliable power into the future we do need the rate increase.

An interim increase has been granted us by the Utilities Commission for April 1, 2004. However this is not the firm rate increase, as there will be a public hearing starting May 17 by the BC Utilities Commission for the public to come and voice their concerns and I would encourage you to do so.

They will make a final decision in the fall this year as to what the increase should be and if it is less than the interim rate customers will be refunded with interest on their bills.

I hope this answers your question somewhat, thank you again for writing."    Elisha Moreno Elisha.Moreno@bchydro.bc.ca

"Seems rear vision is clear vision, 20/20," offers Kia.

 Wonder what we'll discover in another nine years...  

One thing I'm certain of:  W.A.C. Bennett would be turning over in his grave if he knew.

FEB. 22/13 UPDATE:  Lawsuit:  California vs. B.C. Hydro 

AUG.17/13 UPDATE:  Powerex "settles" for $750 million payment to California

"Proof that U.S. lawyers are better than Canadian lawyers," sniffs Kia.