Man Without Qualities

Thursday, March 27, 2003

Chump Change

Much is being made in some quarters of the Federal Regulatory Commission's new findings that attempts to manipulate the California energy market were "epidemic." But the real news here is that the newly discovered "epidemic" did little, if anything, to drive up energy costs - even of one accepts the legitimacy of what appears to be the FERC's post hoc reinterpretation of applicable trading rules, rules which often reduced the efficiency of the market. As the Wall Street Journal reports:

Unless they can prove their innocence, the companies may eventually be forced to disgorge these profits and pay penalties -- both likely measured in millions, not billions, of dollars. The strategies condemned by the FERC are largely a dead issue today. Wholesale energy markets imploded in the wake of Enron Corp.'s December 2001 bankruptcy filing, causing many firms to abandon energy trading. Three companies were accused of such serious market abuse -- Reliant, Enron and BP Energy Co. -- that the FERC proposed stripping them of the authority to sell energy at competitive prices.

It's probably all just as well, since how would Enron - now a bankrupt company - repay the billions of dollars people such as Governor Davis keep claiming Enron owes. Unfortuneately for the people of California, they still need more energy - and none of the Davis administration, the California legislature nor the California regulators are doing anything effective about that. It must take too much time just grandstanding about chump change for them to really focus.

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