The only reason why this was possible is because California had a $250 MW cap for power produced in the state, but no cap on imported electricity.
Their own stupid rules cost them FAR more in the long run. They caused their own shortage by not allowing a free and open market.
"In February 2000, Enron acquired the 1,000 megawatts of the 1,600 megawatts of available transmission capacity on Path 26 from north to south in an ISO-run auction," Stern said. "SCE and my group had argued for position limitations so that no party could acquire so much" capacity as to be able to manipulate the market. The ISO board refused, however.It would appear that the ISO itself made the price manipulation possible.
I still find it interesting that there is no evidence as to how much manipulation occurred or how effective it was. All we have is memos suggesting that Enron try it and testimony from traders that they were pressured to do it. What I want to know is the extent and effectiveness of these tactics, information which seems scant at best.
Enron was paid tens of millions of dollars in 2000 by the ISO to free up the congested line in order to allow electricity to be sent to Northern California, the traders said.Compared to billions of dollars of rate increases, this is hardly a significant number.
D