More than 10 years after energy traders from Enron and other companies took advantage of deregulation to jack up electricity prices, California consumers are still getting gamed. While Enron is gone, Barclays and JP Morgan are among the banks that have taken up their mantle of market manipulation. Thanks to them, consumers in California and other states have paid inflated electric bills for years, adding millions in profits to banker’s coffers.
This isn’t exactly news. FERC, the Federal Energy Regulatory Commission fined Barclays $435 million on July 16, and ordered it to surrender $34.9 million in profits, a small penalty for gaming schemes that FERC estimates cost customers about $139.3 million.
FERC’s order describes the complicated schemes Barclay’s used to keep western power prices artificially high for two years. The tapes were eerily reminiscent the infamous Enron tapes that detailed how prices were manipulated and power was withheld to the point where Californians were suffering regular blackouts despite skyrocketing bills.
Remember Enron’s venal energy traders cackling on tape about their imagined victims?
“Yeah, Grandma Millie, man. So she’s the one who couldn’t figure out how to f—-ing vote on the butterfly ballot, but yeah, now she wants her f—-ing money back for all the power you’ve charged right up her —- jammed right up her a—- for f—-ing $250 a megawatt hour. Yeah, you know. You know Grandma Millie. She’s the one that Al Gore is fighting for.”
Here’s Barclay’s 12 years later: “I just started lifting the piss out of the [P]alo [Verde Hub, a key price-point for the state’s electricity market]”, reported a gleeful trader, who added “was fun. need to do that more often [sic].” Fun? Really?
But not the kind of fun you pay for. Barclays, worth $2.4 trillion, only has to pay a mere $34.9 million, based on its profits during that time, a teeny-tiny fraction of a fraction of Barclays’ net assets. Barclays’ parsimony is particularly galling when you consider the fact that the most of the penalty money would go toward Low Income Home Energy Assistance programs (LIHEAP) in the 4 states victimized by Barclays. The fund provides desperately needed assistance for struggling families to help pay utility bills, including millions of working people whose jobs don’t pay enough for the very basics like electricity and a phone.
Freezing in the winter is not fun. Barclays’ intransigence has forced FERC to file a lawsuit to recover the money and give it back to the customers it was stolen from.
TURN and our allies are also demanding that Barclays “take its medicine” and pay up. We’re glad to see that FERC is going after Barclays, JP Morgan, Constellation and the other companies that have been gaming the energy market. But FERC should not have to go to court to enforce its own orders. And consumers need representation in these cases. Consumer groups are calling for the creation of an office of consumer advocate at FERC to represent residential consumers against the huge corporations that apparently routinely cheat customers out of their money.
The groups include Public Citizen, Americans for Financial Reform, Arizona Community Action; A World Institute for a Sustainable Humanity (AWISH); Citizens’ Utility Board of Oregon; National Consumer Law Center (NCLC), and TURN; more about our efforts here.
by Mindy Spatt, TURN Communications Director