In a pure free market, Enron's manipulations would not work. But they took advantage of incentives built into the system which had a perverse effect. For example, they bought price-controlled electricity from a California company, sent it over the hill, and re-sold it to California at a decontrolled price. They could only do this because out of state purchases were not controlled, while in-state purchases were.
Of course if they had bought the power from the Californian company and sold it in another state, that would have been, well, legal. And the result would have been far worse blackouts than we actually experienced. That probably would have happened if there had been deregulated markets in other states, but not in California. If I can buy power for $250 a megawatt and sell it for $350, I'm going to do it.
So Enron's manipulations most likely helped keep the lights on in California. Yes, at a price, but we probably wouldn't even be talking about Gray Davis' reelection if they hadn't played ball with the state.
Finally, if the power crisis was so great for Enron, why did they collapse with a thud heard 'round the world shortly thereafter? I'd be very curious to know how much they actually made on the power crisis -- and how they lost it all, and then some.
D
My questions are these: (1) Did the Enron gang conduct business with an eye toward simply making an honest profit?
(2) Did they do business with the intent of deceiving, hence lawbreaking? We can't look inside the hearts and souls of the
Enron gang. We can only apply the facts as we know them against Enron's actions.
As notorious safecracker Willy Sutton once said, he only robbed banks because that's where the money was.
Good question. We know that California owed Enron millions of dollars. Did they ever pay up?
California may have well contributed to Enron's collapse.