The Whistleblower #32
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The Whistleblower

The Whistleblower #32 - Jun 21, 2002

Quit FERCing around. After the energy industry ravaged California consumers and investors everywhere, and after the GAO released a report blasting the FERC's utter failure to effectively regulate energy markets, FERC Commissioner Nora Brownell still expresses the expectation that the energy companies will regulate themselves. At a conference sponsored by the National Energy Marketers Association yesterday, Brownell told a group of industry types that "it's far better for people who are in the business and know the business to make a series of recommendations on how we manage these issues," according to the Natural Gas Intelligence Press. Brownell also urged the industry to help make her job easier: "Make the recommendations real…we need to get on with life…[I] didn't come [to FERC] to look backwards and try and fix a world that was incredibly broken." Brownell and her associates at the Commission need to effectively regulate the energy industry, and they shouldn't be waiting for the energy companies to make the first move. It's exactly this sort of faith in industry "self-regulation" on the part of public officials that enabled the energy companies to create so much havoc in the first place.

The house that Enron built can't stand on its own. Enron was known as the "market maker" when it came to electricity trading, since the political maneuvering of the company's executives was largely responsible for the deregulation policies that established the electron's status as a commodity. Perhaps it's fitting, then, that the energy trading sector mimics its maker of late, as the once-lucrative business is unraveling, and the companies that stepped in to fill Enron's void are rushing back out. El Paso slashed its trading staff weeks ago. And AES, which bought electricity services company New Energy Ventures (the founder of which, Michael Peevey, now sits on the Cal. PUC), announced that it would sell the subsidiary due to "Recent changes in wholesale electricity markets," according the company's website. Several days ago, an online industry news magazine reported that some electricity brokers were turning down potential trading partners left and right because the other brokers' companies had lousy credit. Now Dynegy has scrapped its online trading platform specifically because of the chaos in the trading sector, the Associated Press reports. These companies are faltering in the wake of shareholders' "no confidence" votes, which show that the unregulated electricity trading business was built on secrecy and can't withstand the scrutiny it has attracted lately. Enron made the deregulated electricity market, and ironically, because of events set in motion by Enron's massive arrogance, the light is shining on the industry's appalling practices.

Remembering the departed: a continuing series. In issue #26, we began to chronicle the post-Enron exits of executives who steered their companies straight into scandal. Obviously, corporate America crossed the "few bad apples" threshold a long time ago. The latest departure:

Rob Doty, CFO and executive vice president of Dynegy Inc. Doty joins former Dynegy CEO Chuck Watson on the roster of Dynegy executives forced out by Enron-style accounting fraud and market misconduct (seeWB #28). Following reports of Dynegy's sham electricity trades and the SEC's investigation of "Project Alpha," a complex accounting ruse designed to increase the company's revenues and avoid federal taxes, the company's stock has tanked and the company has attracted the attention of SEC investigators.



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