Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 20,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with claimed revenues of nearly $101 billion in 2000.^[1] Fortune named Enron "America's Most Innovative Company" for six consecutive years. At the end of 2001, it was revealed that its reported financial condition was sustained substantially by institutionalized, systematic, and creatively planned accounting fraud, known as the "Enron scandal". Enron has since become a popular symbol of willful corporate fraud and corruption. The scandal also brought into question the accounting practices and activities of many corporations throughout the United States and was a factor in the creation of the Sarbanes–Oxley Act of 2002. The scandal also affected the wider business world by causing the dissolution of the Arthur Andersen accounting firm.^[2]

Enron filed for bankruptcy protection in the Southern District of New York in late 2001 and selected Weil, Gotshal & Manges as its bankruptcy counsel. It emerged from bankruptcy in November 2004, pursuant to a court-approved plan of reorganization, after one of the biggest and most complex bankruptcy cases in U.S. history. A new board of directors changed the name of Enron to Enron Creditors Recovery Corp., and focused on reorganizing and liquidating certain operations and assets of the pre-bankruptcy Enron.^[3] On September 7, 2006, Enron sold Prisma Energy International Inc., its last remaining business, to Ashmore Energy International Ltd. (now AEI).^[4]

Early history[link]

Enron Complex in Downtown Houston

Enron traces its roots to the Northern Natural Gas Company, which was formed in 1932, in Omaha, Nebraska. It was reorganized in 1979 as the leading subsidiary of a holding company, InterNorth which was a highly diversified energy and energy related products company. Internorth was a leader in natural gas production, transmission and marketing as well as natural gas liquids and an innovator in the plastics industry. It owned Peak Antifreeze and developed EVAL resins for food packaging. In 1985, it bought the smaller and less diversified Houston Natural Gas.^[5]

The separate company initially named itself "HNG/InterNorth Inc.", even though InterNorth was the nominal survivor. It built a large and lavish headquarters complex with pink marble in Omaha (dubbed locally as the "Pink Palace"), that was later sold to Physicians Mutual. However, the departure of ex-InterNorth and first CEO of Enron Corp Samuel Segnar six months after the merger allowed former HNG CEO Kenneth Lay to become the next CEO of the newly merged company. Lay soon moved the company's headquarters to Houston after swearing to keep it in Omaha and began to thoroughly re-brand the business. Lay and his secretary, Nancy McNeil, originally selected the name "Enteron" (possibly spelled in camelcase as "EnterOn"), but, when it was pointed out that the term approximated a Greek word referring to the intestines, it was quickly shortened to "Enron". The final name was decided upon only after business cards, stationery, and other items had been printed reading Enteron. Enron's "crooked E" logo was designed in the mid-1990s by the late American graphic designer Paul Rand. Rand's original design included one of the elements of the E in yellow which disappeared when copied or faxed. This was quickly replaced by a green element. Almost immediately after the move to Houston, Enron began selling off key assets such as Northern PetroChemicals and took on silent partners in Enron CoGeneration, Northern Border Pipeline and Transwestern Pipeline and became a less diversified company. Early financial analysts said Enron was swimming in debt and the sale of key operations would not solve the problems.

Misleading financial accounts[link]

In 1990, Enron Finance CEO Jeff Skilling hired Andrew Fastow, who was well acquainted with the burgeoning deregulated energy market Skilling wanted to exploit. In 1993, Fastow set to work establishing numerous limited liability special purpose entities (common business practice); however, it also allowed Enron to place liability so that it would not appear in its accounts, allowing it to maintain a robust and generally growing stock price and thus keeping its critical investment grade credit ratings.

Enron was originally involved in transmitting and distributing electricity and natural gas throughout the United States. The company developed, built, and operated power plants and pipelines while dealing with rules of law and other infrastructures worldwide. Enron owned a large network of natural gas pipelines, which stretched ocean to ocean and border to border including Northern Natural Gas, Florida Gas Transmission, Transwestern Pipeline company and a partnership in Northern Border Pipeline from Canada. The states of California, New Hampshire and Rhode Island had already passed power deregulation laws by July 1996, the time of Enron's proposal to acquire Portland General Electric.^[6] In 1998, Enron moved into the water sector, creating the Azurix Corporation, which it part-floated on the New York Stock Exchange in June 1999. Azurix failed to break into the water utility market, and one of its major concessions, in Buenos Aires, was a large-scale money-loser. After the move to Houston, many analysts^[who?] criticized the Enron management as swimming in debt. The Enron management pursued aggressive retribution against its critics, setting the pattern for dealing with accountants, lawyers, and the financial media.

Enron grew wealthy due largely to marketing, promoting power, and its high stock price. Enron was named "America's Most Innovative Company" by Fortune for six consecutive years, from 1996 to 2001. It was on the Fortune's "100 Best Companies to Work for in America" list in 2000, and had offices that were stunning in their opulence. Enron was hailed by many, including labor and the workforce, as an overall great company, praised for its large long-term pensions, benefits for its workers and extremely effective management until its exposure in corporate fraud. The first analyst to publicly disclose Enron's financial flaws was Daniel Scotto, who in August 2001 issued a report entitled "All Stressed-up… And No Place To Go", which encouraged investors to sell Enron stocks and bonds at any and all costs.

As was later discovered, many of Enron's recorded assets and profits were inflated or even wholly fraudulent and nonexistent. One example of fraudulent records was in 1999 when Enron promised to pay back Merrill Lynch & Co investment with interest in order to show profit on its books. Debts and losses were put into entities formed "offshore" that were not included in the firm's financial statements, and other sophisticated and arcane financial transactions between Enron and related companies were used to take unprofitable entities off the company's books.

Its most valuable asset and the largest source of honest income, the 1930s-era Northern Natural Gas, was eventually purchased back by a group of Omaha investors, who moved its headquarters back to Omaha, and is now a unit of Warren Buffett's MidAmerican Energy Holdings Corp. NNG was put up as collateral for a $2.5 billion capital infusion by Dynegy Corporation when Dynegy was planning to buy Enron. When Dynegy looked closely at Enron's books, they backed out of the deal and fired their CEO, Chuck Watson. The new chairman and head CEO, the late Daniel Dienstbier, had been president of NNG and an Enron executive at one time and was forced out of Enron by Ken Lay. Dienstbier was an acquaintance of Warren Buffett. NNG continues to be profitable today.

Former management and corporate governance[link]

Central Management

• Kenneth Lay: Chairman, and Chief executive officer
• Jeffrey Skilling: President, Chief operating officer, and CEO (February–August 2001)
• Andrew Fastow: Chief financial officer
• Rick Causey: Chief accounting officer
• Rebecca Mark-Jusbasche: CEO of Enron International and Azurix
• Lou Pai: CEO of Enron Energy Services
• Forrest Hoglund: CEO of Enron Oil and Gas
• Richard Gallagher: Head of Enron Wholesale Global International Group
• Kenneth "Ken" Rice: CEO of Enron Wholesale and Enron Broadband Services
• J. Clifford Baxter: CEO of Enron North America
• Sherron Watkins: Head of Enron Global Finance
• Jim Derrick: Enron General Counsel
• Mark Koenig: Head of Enron Investor Relations
• Joan Foley: Head of Enron Human Resources
• Greg Whally: President and COO of Enron (August 2001– Bankruptcy)
• Jeff McMahon: CFO of Enron (October 2001-Bankruptcy)

Board of Directors

• Robert A. Belfer: Chairman, Belco Oil and Gas Corp
• Norman P. Blake Jr.: Chairman, President and CEO, Comdisco, Inc.
• Ronnie C. Chan: Chairman, Hang Lung Group
• John H. Duncan: Former Chairman of The Executive Gulf and Western Industries Inc.
• Wendy L. Gramm: Former Chairman of US Commodity Futures Trading Commission
• Ken L. Harrison: Former Chairman and CEO of Portland General Electric
• Robert K. Jaedicke: Professor Emeritus of Accounting at Stanford University
• Charles A. LeMaistre: President Emeritus, University of Texas M.D. Anderson Cancer Center
• John Mendelsohn: President, University of Texas M.D. Anderson Cancer Center
• Jerome J. Meyer: Chairman, Tektronix
• Paulo V. Ferraz Pereira: Executive Vice President if Group Bozano
• Frank Savage: Chairman: Alliance Capital Management
• John A. Urquhart: Senior Advisor to the Chairman of Enron
• John Wakeham: Former U.K. Secretary of state for Energy
• Herbert S. Winokur Jr.: President of Winokur Holdings Inc.

Products[link]

Enron traded in more than 30 different products, including the following:

• Products traded on EnronOnline
  • Petrochemicals
  • Plastics
  • Power
  • Pulp and paper
  • Steel
  • Weather Risk Management

• Oil and LNG transportation
• Broadband
• Principal investments
• Risk management for commodities
• Shipping / freight
• Streaming media
• Water and wastewater

It was also an extensive futures trader, including sugar, coffee, grains, hog, and other meat futures. At the time of its bankruptcy filing in December 2001, Enron structured into seven distinct business units.

Online marketplace services[link]

• EnronOnline (commodity trading platform)
• ClickPaper (transaction platform for pulp, paper, and wood products)
• EnronCredit (the first global online credit department to provide live credit prices and enable business-to-business customers to hedge credit exposure instantly via the Internet.)
• ePowerOnline (customer interface for Enron Broadband Services)
• Enron Direct (sales of fixed-price contracts for gas and electricity; Europe only)
• EnergyDesk (energy-related derivatives trading; Europe only)
• NewPowerCompany (online energy trading, joint venture with IBM and AOL)
• Enron Weather (weather derivatives)
• DealBench (online business services)
• Water2Water (water storage, supply, and quality credits trading)
• HotTap (customer interface for Enron's U.S. gas pipeline businesses)
• Enromarkt (business to business pricing and information platform; Germany only)

Broadband services[link]

• Enron Intelligent Network (broadband content delivery)
• Enron Media Services (risk management services for media content companies)
• Customizable Bandwidth Solutions (bandwidth and fiber products trading)
• Streaming Media Applications (live or on-demand Internet broadcasting applications)

Energy and commodities services[link]

• Enron Power (electricity wholesaling)
• Enron Natural Gas (natural gas wholesaling)
• Enron Clean Fuels (biofuel wholesaling)
• Enron Pulp and Paper, Packaging, and Lumber (risk management derivatives for forest products industry)
• Enron Coal and Emissions (coal wholesaling and CO2 offsets trading)
• Enron Plastics and Petrochemicals (price risk management for polymers, olefins, methanol, aromatics, and natural gas liquids)
• Enron Weather Risk Management (Weather Derivatives)
• Enron Steel (financial swap contracts and spot pricing for the steel industry)
• Enron Crude Oil and Oil Products (petroleum hedging)
• Enron Wind Power Services (wind turbine manufacturing and wind farm operation)
• MG Plc. (U.K. metals merchant)
• Enron Energy Services (Selling services to industrial end users)
• Enron International (operation of all overseas assets)

Capital and risk management services[link]

Commercial and industrial outsourcing services[link]

• Commodity Management
• Energy Asset Management
• Energy Information Managementbb
• Facility Management
• Capital Management
• Azurix Inc. (water utilities and infrastructure)

Project development and management services[link]

• Energy Infrastructure Development (developing, financing, and operation of power plants and related projects)
• Enron Global Exploration & Production Inc. (oil and natural gas field services)
• Elektro Electricidade e Servicos SA (Brazilian electric utility)

Energy transportation and upstream services[link]

• Natural Gas Transportation
• Northern Border Pipeline
• Houston Pipeline
• Transwestern Pipeline
• Florida Gas Transmission
• Northern Natural Gas Company
• Natural Gas Storage
• Compression Services
• Gas Processing and Treatment
• Engineering, Procurement, and Construction Services
• EOTT Energy Inc. (oil transportation)

Enron manufactured gas valves, circuit breakers, thermostats, and electrical equipment in Venezuela through INSELA SA, a 50–50 joint venture with General Electric. Enron owned three paper and pulp products companies: Garden State Paper, a newsprint mill; as well as Papiers Stadacona and St. Aurelie Timberlands. Enron held a controlling stake in the Louisiana-based petroleum exploration and production company Mariner Energy.

Enron International[link]

Enron International (EI) was Enron's wholesale asset development and asset management business. Its primary focus was developing and building natural gas power plants outside North America. Enron Engineering and Construction Company (EECC) was a wholly owned subsidiary of Enron International, and built almost all of Enron International's power plants. Unlike other business units of Enron, Enron International had a strong cash flow on bankruptcy filing.^{[citation needed]} Enron International consisted of all of Enron's foreign power projects, including ones in Europe.

Leadership[link]

Rebecca Mark was the CEO of Enron International until she moved over to lead Enron's newly acquired water business, Azurix, in 1997. Mark played a major role in the development of the Dabhol project in India, Enron's largest international endeavor.^{[citation needed]}

Projects[link]

Enron International constructed power plants and pipelines across the globe. Some today are still up and running, including the massive Teeside plant in England. Others, like a barge mounted plant off Puerto Plata in the Dominican Republic, cost Enron money through law suits and investment losses.^{[citation needed]} Puerto Plata was a barge mounted power plant next to the hotel Hotelero del Atlantico. When the plant was fired up, winds blew soot from the plant onto the hotel guests' meals, blackening their food. The winds also blew garbage from nearby slums into the plant's water-intake system. For some time the only solution was to hire men who would row out and push the garbage away with their paddles.^{[citation needed]} Through mid-2000 the company collected a paltry $3.5 million from a $95 million investment.^{[citation needed]} Enron also had other investment projects in Europe, South America, Argentina, Brazil, Bolivia, Colombia, Mexico, Jamaica, Venezuela, and across the Caribbean.^{[citation needed]}

India[link]

Around 1992 India came to the United States to find energy investors to help with India's energy shortage problems.^{[citation needed]} In December 1993, Enron inked a 20-year power-purchase contract with the Maharashtra State Electricity Board.^{[citation needed]} The contract allowed Enron to construct a massive 2,015 megawatt power plant. Construction would be completed in two phases, and Enron would form the Dabhol Power Company to help manage the plant. The power project was the first step in a $20 billion scheme to help rebuild and stabilize India's power grid. Enron, GE (who was selling turbines to the project), and Bechtel (who was actually constructing the plant), each put up 10% equity.^{[citation needed]}

In 1996, when India's Congress Party was no longer in power, the Indian government assessed the project as being excessively expensive and refused to pay for the plant and stopped construction.^{[citation needed]} The Maharashtra State Electricity Board (MSEB), the local state run utility, was required by contract to continue to pay Enron plant maintenance charges, even if no power was purchased from the plant. The MSEB determined that it could not afford to purchase the power (at Rs. 8 per unit kWh) charged by Enron. The plant operator was unable to find alternate customers for Dabhol power due to the absence of an open free market in the regulated structure of utilities in India.^{[citation needed]} From 1996 until Enron's bankruptcy in 2001 the company tried to revive the project and spark interest in India's need for the power plant without success.

The Panna-Mukta oil field and the Tapti gas field to the north were discovered by the Indian state-owned Oil and Natural Gas Corporation (ONGC), who initially operated the fields.^[7] Following a privatization policy a Reliance - Enron consortium gained a 25-year lease on the oil field in February 1994. Oil production at that time was 12,000 barrels per day.^[8] The lease was awarded under a production sharing arrangement. The Government of India would receive a variable share of profit depending on the investment multiple. In December 1994 a joint venture between ONGC (40%), Enron (30%) and Reliance (30%) took control of the field.^[7] In 2002 British Gas (BG) bought Enron's 30% share of the Panna-Mukta and Tapti fields for $350 million.^[9]

Project Summer[link]

During the summer of 2001, Enron made an attempt to sell a number of Enron International's assets, many of which were not sold. It is still unclear why Enron wanted to sell these assets. Most^[who?] suspect it was because Enron was in need of cash.^[10]

EnronOnline[link]

In November 1999, Enron launched EnronOnline. Conceptualized by the company's European Gas Trading team under John Siepierski, it was the first web-based transaction system that allowed buyers and sellers to buy, sell, and trade commodity products globally. It allowed users to do business only with Enron. At its peak, over $6bn worth of commodities were transacted through EnronOnline every day.

EnronOnline went live on November 29, 1999. The site allowed Enron to transact with participants in the global energy markets. The main commodities offered on EnronOnline were natural gas and electricity, although there were 500 other products including credit derivatives, bankruptcy swaps, pulp, gas, plastics, paper, steel, metals, freight, and TV commercial time.

EnronOnline was sold to UBS as part of the sale of the North American Natural Gas and Power trading group to UBS AG.

Principal assets[link]

At the time of bankruptcy, Enron owned interests in the following major assets:

Power plants[link]

Enron owned or operated 38 electric power plants worldwide:

• Teesside (United Kingdom)—at the time of commission in 1992, at 1750 MW, was the largest Natural Gas Co-Gen plant in the world. Its on-time and under-budget completion put Enron Power on the map as an international developer, owner and operator.
• Bahia Las Minas (Panama)—largest thermal power plant in Central America, 355 MW
• Puerto Quetzal Power Project (Guatemala)—110 MW
• PQP LLC (Guatemala)—holding company for 124 MW Power Barge named "Esperanza"
• Empresa Energetica Corinto (Nicaragua)—holding company for "Margarita II" 70.5 MW power barge, Enron held 35% share
• EcoElectrica (Puerto Rico, USA)—507 MW natural gas cogeneration plant, with adjacent LNG import terminal- supplied 20% of island's electricity
• Puerto Plata Power Project (Dominican Republic)—185 MW power barge named "Puerto Plata"
• Modesto Maranzana Power Plant (Argentina)—70 MW
• Cuiaba Integrated Project (Brazil)—480 MW combined cycle power plant
• Nowa Sarzyna Power Plant (Poland)—116 MW, first privately developed post-Communist electricity project in Poland
• Sarlux Power Project (Italy)—551 MW combined cycle power plant, converted residue from Italy's largest oil refinery into synthetic gas for fuel
• Trakya Power Project (Turkey)—478 MW
• Chengdu Cogen Project (China)—284 MW, joint venture with Sichuan Electric Company
• Northern Marianas Power Project (Guam, USA)—80 MW slow speed diesel oil plant
• Batangas Power Project (Philippines)—110 MW
• Subic Bay Power Project (Philippines)—116 MW
• Dabhol Power Project (India)—2,184 MW combined cycle plant, generally considered one of Enron's most controversial and least successful projects
• Storm Lake Wind Generation Project (Iowa, USA)—193 MW wind farm
• Lake Benton II Wind Generation Facility (Minnesota, USA)—104 MW wind farm
• Lake Benton I Wind Generation Facility (Minnesota, USA)—107 MW wind farm
• Cabazon Wind Generation Facility (California, USA)—40 MW wind farm
• Green Power I Wind Generation Facility (California, USA)—16.5 MW wind farm
• Indian Mesa I Wind Generation Facility (Texas, USA)—25.5 MW wind farm
• Clear Sky Wind Power Generation Facility (Texas, USA)—135 MW wind farm
• Mill Run Wind Wind Power Generation Facility (Pennsylvania, USA)—15 MW wind farm
• Trent Mesa Wind Generation Facility (Texas, USA)—150 MW wind farm
• Montfort Wind Generation Facility (Wisconsin, USA)—30 MW wind farm
• 8 hydroelectric plants in Oregon with a combined capacity of 509 MW, owned through Portland General Electric
• 4 additional thermal plants in Oregon and Montana with a combined capacity of 1,464 MW, owned through Portland General Electric

Pipelines[link]

• Centragas (Colombia)—357 miles, natural gas
• Promigas (Colombia)
• Transportadora de Gas del Sur (Argentina)—largest pipeline system in South America, 5,005 km
• CEG (Brazil)—1,368 miles, natural gas
• CEGRio (Brazil)
• Transredes (Bolivia)—3,000 km natural gas pipeline and 2,500 km oil & liquids pipeline
• Bolivia-to-Brazil Pipeline (Bolivia/Brazil)—3,000 km, natural gas
• Northern Natural Gas (Upper Midwestern USA)—16,500 miles, included share in Trailblazer Pipeline
• Transwestern Pipeline (Texas, Arizona, New Mexico, Colorado)—2,554 miles
• Florida Gas Transmission (Texas, Louisiana, Alabama, Mississippi, Florida)—4,800 miles
• Northern Border Pipeline (Indiana, Illinois, Iowa, South Dakota, North Dakota, Montana )—1,249 miles

Electric utilities/distributors[link]

• Portland General Electric Company (USA)—serving 775,000 customers in Oregon
• Elektro Electricidade e Servicos S.A. (Brazil)—1.5 million customers
• Compania Anonima Luz y Fuerza Electricas de Puerto Cabello (Venezuela)—50,000 customers

Natural gas-related businesses[link]

• ProCaribe (Puerto Rico, USA)—LPG storage terminal, only fully refrigerated LPG storage facility in Caribbean
• San Juan Gas Company (Puerto Rico, USA)—gas distribution, 400 industrial/commercial customers
• Industrial Gases Ltd. (Jamaica)—8 filling plants, industrial gas manufacturing & LPG distribution, held 100% monopoly on Jamaican industrial gas business and 40% of LPG business
• Gaspart (Brazil)—consortium of 7 gas distribution companies
• Vengas (Venezuela)—LPG transportation and distribution
• ACCRO III and IV Project(Venezuela) is the largest outsourcing contract offered by PDVSA. Enron's partners in the venture were Accro Barbados Ltd., a subsidiary of TransCanada Pipelines Ltd., and private Venezuelan company Tecnoconsult. The project included two extraction plants, each with 400 MM cubic feet per day capacity, a fractionation plant to remove the liquids and other related infrastructure
• SK-Enron Company Ltd. (South Korea)—joint venture with SK Corporation; included 8 city gas utilities, an LPG distributor, and a steam and electricity cogeneration facility

Pulp and paper[link]

• Garden State Paper Company Inc. (New Jersey, USA)—paperboard and newsprint recycling mill
• Papiers Stadacona Ltee. (Quebec, Canada)—wood pulp & paper mill
• St. Aurelie Timberlands Company Ltd. (Quebec, and New Brunswick, Canada & Maine, USA)—timber company

Other[link]

• Mariner Energy Inc. (Houston, Texas, USA)—oil & gas exploration, development, and production with operations in the Gulf of Mexico
• Interruptores Especializados Lara (Venezuela)—manufacturer of valves, thermostats, and electrical breakers for appliances
• Enron Wind (formerly Zond) – manufacturer of wind power turbines and related systems, with factories in USA, Spain, Portugal, and Germany. Purchased by General Electric in 2002.^[11]

Enron Prize for Distinguished Public Service[link]

In the mid-1990s, Enron established an endowment for the Enron Prize for Distinguished Public Service, awarded by Rice University's Baker Institute to "recognize outstanding individuals for their contributions to public service". Recipients were:

• 1995: Colin Powell^[12]
• 1997: Mikhail Gorbachev^[12]
• 1999 (early): Eduard Shevardnadze^[12]
• 1999 (late): Nelson Mandela^[13]
• 2001: Alan Greenspan^[14]

Greenspan, because of his position as the Fed chairman, was not at liberty to accept the $10,000 honorarium, the $15,000 sculpture, nor the crystal trophy, but only accepted the "honor" of being named an Enron Prize recipient.^[15] The situation was further complicated because a few days earlier, Enron had filed paperwork admitting it had fudged financial statements for five years.^[16] Greenspan did not mention Enron a single time during his speech.^[17] At the ceremony, Ken Lay indicated his beliefs about the future of the award when he stated, "I'm looking forward to our first woman recipient."^[18] The next morning, it was reported in The Houston Chronicle that no decision had been made on whether the name of the prize would be changed.^[19] 19 days after the prize was awarded to Greenspan, Enron declared bankruptcy.^[20]

In early 2002, Enron was awarded Harvard's (in)famous IgNobel Prize for 'Most Creative Use of Imaginary Numbers.' The various former members of Enron management all declined to accept the award in person, although no reason was given at the time.

2001 Accounting scandal[link]

In 2001, after a series of revelations involving irregular accounting procedures bordering on fraud perpetrated throughout the 1990s involving Enron and its accounting firm Arthur Andersen, along with the September 11 attacks, Enron suffered the largest Chapter 11 bankruptcy in history (since surpassed by those of Worldcom in 2002 and Lehman Brothers in 2008).

As the scandal unraveled, Enron shares dropped from over US $90.00 in the summer of 2000 to just pennies.^{[citation needed]} Enron had been considered a blue chip stock, so this was an unprecedented event in the financial world. Enron's plunge occurred after the revelation that much of its profits and revenue were the result of deals with special purpose entities (limited partnerships which it controlled). This meant that many of Enron's debts and the losses that it suffered were not reported in its financial statements.^{[citation needed]}

A white knight rescue attempt by a similar, smaller energy company, Dynegy, collapsed in late November due to concerns over an unexpected restatement of earnings.^{[citation needed]} Enron filed for bankruptcy on December 2, 2001. In addition, the scandal caused the dissolution of Arthur Andersen, which at the time was one of the world's top accounting firms. The firm was found guilty of obstruction of justice in 2002 for destroying documents related to the Enron audit.^{[citation needed]} Since the SEC is not allowed to accept audits from convicted felons, Andersen was forced to stop auditing public companies. Although the conviction was thrown out in 2005 by the Supreme Court, the damage to the Andersen name has prevented it from returning as a viable business even on a limited scale.

Enron also withdrew a naming rights deal with the Houston Astros Major League Baseball club to have its name associated with their new stadium, which was formerly known as Enron Field (now Minute Maid Park).^{[citation needed]}

Accounting practices[link]

Enron created offshore entities (units which may be used for planning and avoidance of taxes, raising the profitability of a business). This provided ownership and management with full freedom of currency movement and the anonymity that allowed the company to hide losses. These entities made Enron look more profitable than it actually was, and created a dangerous spiral, in which each quarter, corporate officers would have to perform more and more financial deception to create the illusion of billions in profits while the company was actually losing money.^[21] This practice drove up their stock price to new levels, at which point the executives began to work on insider information and trade millions of dollars worth of Enron stock. The executives and insiders at Enron knew about the offshore accounts that were hiding losses for the company; however, the investors knew nothing of this. Chief Financial Officer Andrew Fastow led the team which created the off-books companies, and manipulated the deals to provide himself, his family, and his friends with hundreds of millions of dollars in guaranteed revenue, at the expense of the corporation for which he worked and its stockholders.^{[citation needed]}

In 1999, Enron launched EnronOnline, an Internet-based trading operation, which was used by virtually every energy company in the United States. Enron president and chief operating officer Jeffrey Skilling began advocating a novel idea: the company didn't really need any "assets."^{[citation needed]} By pushing the company's aggressive investment strategy, he helped make Enron the biggest wholesaler of gas and electricity, trading over $27 billion per quarter. The firm's figures, however, had to be accepted at face value. Under Skilling, Enron adopted mark to market accounting, in which anticipated future profits from any deal were tabulated as if real today. Thus, Enron could record gains from what over time might turn out to be losses, as the company's fiscal health became secondary to manipulating its stock price on Wall Street during the Tech boom.^{[citation needed]} But when a company's success is measured by agreeable financial statements emerging from a black box, a term Skilling himself admitted, actual balance sheets prove inconvenient. Indeed, Enron's unscrupulous actions were often gambles to keep the deception going and so push up the stock price. An advancing number meant a continued infusion of investor capital on which debt-ridden Enron in large part subsisted. Much like a ponzi-scheme. Under pressure to maintain the illusion, Skilling verbally attacked Wall Street Analyst Richard Grubman,^[22] who questioned Enron's unusual accounting practice during a recorded conference call. When Grubman complained that Enron was the only company that could not release a balance sheet along with its earnings statements, Skilling replied "Well, thank you very much, we appreciate that . . . asshole." Though the comment was met with dismay and astonishment by press and public, it became an inside joke among many Enron employees, mocking Grubman for his perceived meddling rather than Skilling's lack of tact. When asked during his trial, Skilling wholeheartedly admitted that industrial dominance and abuse was a global problem: "Oh yes, yes sure, it is."^[23]

Peak and decline of stock price[link]

In August 2000, Enron's stock price hit its highest value of $90.^[24] At this point Enron executives, who possessed the inside information on the hidden losses, began to sell their stock. At the same time, the general public and Enron's investors were told to buy the stock. Executives told the investors that the stock would continue to climb until it reached possibly the $130 to $140 range, while secretly unloading their shares.

As executives sold their shares, the price began to drop. Investors were told to continue buying stock or hold steady if they already owned Enron because the stock price would rebound in the near future.^{[citation needed]} Kenneth Lay's strategy for responding to Enron's continuing problems was in his demeanor. As he did many times, Lay would issue a statement or make an appearance to calm investors and assure them that Enron was headed in the right direction.^{[citation needed]}

By August 15, 2001, Enron's stock price had fallen to $42. Many of the investors still trusted Lay and believed that Enron would rule the market.^{[citation needed]} They continued to buy or hold their stock as the equity value declined. As October closed, the stock had fallen to $15. Many saw this as a great opportunity to buy Enron stock because of what Lay had been telling them in the media.^{[citation needed]}

Lay was accused of selling over $70 million worth of stock at this time, which he used to repay cash advances on lines of credit. He sold another $20 million worth of stock in the open market.^{[citation needed]} Also, Lay's wife, Linda, was accused of selling 500,000 shares of Enron stock totaling $1.2 million on November 28, 2001. The money earned from this sale did not go to the family but rather to charitable organizations, which already received pledges of contributions from the foundation.^{[citation needed]} Records show that Mrs. Lay placed the sale order sometime between 10:00 and 10:20 am. News of Enron's problems, including the millions of dollars in losses they hid went public about 10:30 that morning, and the stock price soon fell to below one dollar.

Former Enron executive Paula Rieker was charged with criminal insider trading. Rieker obtained 18,380 Enron shares for $15.51 a share. She sold that stock for $49.77 a share in July 2001, a week before the public was told what she already knew about the $102 million loss.^{[citation needed]}

Post-bankruptcy[link]

Enron initially planned to retain its three domestic pipeline companies as well as most of its overseas assets. However, before emerging from bankruptcy, Enron spun off its domestic pipeline companies as CrossCountry Energy.^{[citation needed]}

Enron sold its last business, Prisma Energy, in 2006, leaving it as an asset-less shell.^{[citation needed]} In early 2007, it changed its name to Enron Creditors Recovery Corporation. Its goal is to pay off the old Enron's remaining creditors and wind down Enron's affairs.

Azurix, the former water utility branch of the company, remains under Enron ownership, although it remains asset-less. It is involved in several litigations against the government of Argentina claiming compensation relating to the negligence and corruption of the local governance during its management of the Buenos Aires water concession in 1999, which led to substantial amounts of debt (approx. $620 million) and the eventual collapse of the branch.^{[citation needed]}

Shortly after emerging from bankruptcy in November 2004, Enron's new board of directors sued 11 financial institutions for helping Lay, Fastow, Skilling and others hide Enron's true financial condition. The proceedings were dubbed the "megaclaims litigation." Among the defendants were Royal Bank of Scotland, Deutsche Bank and Citigroup. As of 2008^[update], Enron has settled with all of the institutions, ending with Citigroup. Enron was able to obtain nearly $20 billion dollars to distribute to its creditors as a result of the megaclaims litigation.^{[citation needed]} As of December 2009, some claim and process payments are still being distributed.

California's deregulation and subsequent energy crisis[link]

In October 2000, Daniel Scotto, the top ranked utility analyst on Wall Street, suspended his ratings on all energy companies conducting business in California because of the possibility that the companies would not receive full and adequate compensation for the deferred energy accounts used as the cornerstone for the California Deregulation Plan enacted in the late 1990s.^{[citation needed]} Five months later, Pacific Gas & Electric (PG&E) was forced into bankruptcy. Senator Phil Gramm, the second largest recipient of campaign contributions from Enron,^[25] succeeded in legislating California's energy commodity trading deregulation. Despite warnings from prominent consumer groups which stated that this law would give energy traders too much influence over energy commodity prices, the legislation was passed in December 2000.

As Public Citizen reported, "Because of Enron’s new, unregulated power auction, the company’s 'Wholesale Services' revenues quadrupled—from $12 billion in the first quarter of 2000 to $48.4 billion in the first quarter of 2001."^[26]

Before passage of the deregulation law, there had been only one Stage 3 rolling blackout declared. Following passage, California had a total of 38 blackouts defined as Stage 3 rolling blackouts, until federal regulators intervened in June 2001.^{[citation needed]} These blackouts occurred mainly as a result of a poorly designed market system that was manipulated by traders and marketers. Enron traders were revealed as intentionally encouraging the removal of power from the market during California's energy crisis by encouraging suppliers to shut down plants to perform unnecessary maintenance, as documented in recordings made at the time.^[27][28] These acts contributed to the need for rolling blackouts, which adversely affected many businesses dependent upon a reliable supply of electricity, and inconvenienced a large number of retail consumers. This scattered supply raised the price exponentially, and Enron traders were thus able to sell power at premium prices, sometimes up to a factor of 20x its normal peak value.

See also[link]

	Houston portal
	Companies portal

• Enron: The Smartest Guys in the Room, an award-winning 2005 documentary film which examines the collapse of the Enron Corporation.
• The Crooked E: The Unshredded Truth About Enron, a television movie aired by CBS in January 2003 based on the book Anatomy of Greed by Brian Cruver.
• Pipe Dreams: Greed, Ego, and the Death of Enron, a book by Robert Bryce.
• ENRON, a 2009 play by British playwright Lucy Prebble.
• Dot Com Bubble

References[link]

Bibliography[link]

This article includes a list of references, but its sources remain unclear because it has insufficient inline citations. Please help to improve this article by introducing more precise citations. (December 2010)

• Robert Bryce, Pipe Dreams: Greed, Ego, and the Death of Enron (PublicAffairs, 2002) ISBN 1-58648-138-X
• Lynn Brewer, Matthew Scott Hansen, House of Cards, Confessions of An Enron Executive (Virtualbookworm.com Publishing, 2002) ISBN 1-58939-248-5 ISBN 1-58939-248-5
• Kurt Eichenwald, Conspiracy of Fools: A True Story (Broadway Books, 2005) ISBN 0-7679-1178-4
• Peter C. Fusaro, Ross M. Miller, What Went Wrong at Enron: Everyone's Guide to the Largest Bankruptcy in U.S. History (Wiley, 2002), ISBN 0-471-26574-8
• Loren Fox, Enron: The Rise and Fall. (Hoboken, N.J.: Wiley, 2003)
• Judith Haney Enron's Bust: Was it the result of Over-Confidence or a Confidence Game? USNewsLink/ December 13, 2001
• Marc Hodak, The Enron Scandal, Organizational Behavior Research Center Papers (SSRN), June 4, 2007
• Bethany McLean, Peter Elkind, Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron (Portfolio, 2003) ISBN 1-59184-008-2
• Mimi Swartz, Sherron Watkins, Power Failure: The Inside Story of the Collapse of Enron (Doubleday, 2003) ISBN 0-385-50787-9
• Daniel Scotto "American Financial Analyst: The First Analyst to recommend the selling of Enron Stock"
• Calkins, Laurel Brubaker. “Enron Fraud Trial Ends in 5 Convictions.” The Washington Post 4 Nov. 2004: n. pag. Google. Web. 6 Dec. 2011. <http://www.washingtonpost.com/wp-dyn//A23034-2004Nov3.html>.

External links[link]

• All Enron emails released into the public domain, archived and searchable
• Enron Corporation homepage
• CrossCountry Energy L.L.C.
• Portland General Electric Company
• Northern Natural Gas Company
• "Enron—Legal News Archives" Breaking Legal News
• Enron and the Cult of Personality
• Enron's Code of Ethics
• Enron board records at the Hagley Library
• "The Fall of Enron" HBS Research paper
• Public Citizen Access to Justice,Financial Reform, and Government Accontability

Data[link]

• Yahoo!: Enron Corp. Company Profile
• Hoovers: Enron Creditors Recovery Corp. Profile
• Google Finance: Enron Creditors Recovery Corp. Profile
• Enron Chronology
• Enron Securities Litigation Web Site (Contains the ENRON historical stock quotes from 1997 to 2002.)

Jason Leopold on RT America in March 2012

Jason Leopold is an American investigative reporter. Leopold is known for his work at Truthout as a senior editor and reporter, a position he left after three years on February 19, 2008, to co-found the web-based political magazine The Public Record, Leopold's profile page on The Public Record now says he is Editor-at-Large.^[1] Leopold returned to Truthout as Deputy Managing Editor in October 2009 and was made lead investigative reporter in 2012.^[2] Leopold has written stories on BP, Enron, the California Energy Crisis, the Bush administration's torture polices, and the Plame affair. His pieces have been published in Asia Times,^[3] The Los Angeles Times, The Wall Street Journal, CBS MarketWatch,^[4][5][6] The Nation, and Utne.com.^[7] Leopold has also written about foreign and domestic policy online for publications such as Alternet, CounterPunch, Common Dreams, Dissident Voice, The Huffington Post, Political Affairs Magazine, The Raw Story, Scoop, ZNet.

Career[link]

Leopold began his career in 1992, writing obituaries for The Reporter Dispatch newspaper in White Plains, New York.^{[citation needed]} He became the crime and courts reporter for the Whittier Daily News in 1997 and then moved to the City News Service where he covered court trials.^[8] Leopold has also worked as a city editor and reporter for The Los Angeles Times.^[9] He then worked for Dow Jones Newswires as its Los Angeles bureau chief. According to a Washington Post report, the press release for Leopold's unpublished book Off the Record stated that "He says he was fired by the Los Angeles Times 'for threatening to rip a reporter's head off.' Leopold says he quit Dow Jones Newswires in a dispute over his beat, but later learned the news service was planning to fire him because of a correction to one of his Enron stories: 'Seems I got all of the facts wrong.'"^[9] Leopold is currently the US correspondent for 95bFM in Auckland, New Zealand.^[1]

California energy crisis[link]

Leopold was referred to as "one of the most aggressive reporters" on the California energy crisis by Jill Stewart, a columnist for the now-defunct New Times LA newspaper in Los Angeles.^[10] An article Leopold wrote for CBS Marketwatch about Enron's role in the California energy crisis was cited during a floor speech by Sen. Dianne Feinstein (D-California) and read into the Congressional Record on June 10, 2003, as Congress was debating energy policy.^[11]

Enron[link]

Leopold's reporting on Enron was featured in a National Public Radio special broadcast, "Blind Trust."^[12] According to Publishers Weekly, Leopold was "one of the few reporters who'd actually interviewed Enron President Jeff Skilling" following Enron's bankruptcy in December 2001.^[13]

Salon article removal[link]

In September 2002, following a two-week investigation, Salon removed from its website an article authored by Leopold about Army Secretary Thomas E. White's role in the Enron collapse, due to questions about the validity of an e-mail and allegations that portions of the article had not been adequately credited to the Financial Times. The disputed e-mail was said to have been from White, telling the recipient to "Close a bigger deal to hide the loss." According to Salon, Leopold's article "used seven full paragraphs amounting to 480 words, virtually verbatim, from the FT. There were two attributions to the FT within the passage, but they appeared to apply only to the specific sentences that contained them, not to the full passage."^[14] Leopold later admitted that he had been careless by not providing the FT with additional credit, but insisted that Salon's editors had all the relevant documents, including the disputed White email, before the story was published.^[14] Paul Krugman of the New York Times, who wrote a piece based in part on Leopold's work, also had to backpedal, acknowledging that he should not have cited the e-mail.^[14][15][16]

Salon removed the story from its website and said that Leopold had plagiarized text from the FT,^[15] but the article remains in the Nexis archives.^[16] Leopold said he had slightly misquoted the email, which should have read "Close a bigger deal. Hide the loss before the 1Q". White denied sending the email in a letter he sent to The New York Times, and when Salon's editors contacted Leopold's source, the source denied speaking to him.^[14][16] The Village Voice reported, "Obviously, Leopold made mistakes, but it's not at all clear they justify a full repudiation of the story or a revocation of his journalistic license. As Paul Krugman told the Voice, 'Everything else in that story checked out. The substance of his reporting was entirely correct.'"^[16] Commenting on the case, Kerry Lauerman of Salon said that "Leopold definitely represents the dark side of the web ... he became this sort of hero for throngs people online."^[17]

Books[link]

Prior to the publication of News Junkie, Leopold's book was titled Off the Record. The book's publisher, according to the Washington Post report, said the book has been dropped for "business reasons." The Post wrote that it was canceled following reported legal threats from Steven Maviglio, the press secretary to former Governor Gray Davis, who, according to the manuscript, invested in energy companies using inside information. The author of the Washington Post story about Leopold's book, Howard Kurtz, was featured in News Junkie. Leopold called him "lazy."^[9]

In the book, Leopold also revealed many secrets about his life such as a prior drug addiction, bouts with mental illness and suicide attempts. He also disclosed how he lied to employers about a criminal conviction for larceny that took place when Leopold was in his 20s and working in the record business.^[9]

Publishers Weekly wrote of News Junkie that "While there's a lot of lying admitted to in this scrappy memoir, from Leopold's hiding of his criminal past to his playing of sources to get his scoops, it's (probably) not an untruthful memoir—indeed, it might become required reading for aspiring journalists."^[18] The book was on the Los Angeles Times' Bestsellers / Paperbacks list on June 11, 2006.^[19] and July 16, 2006^[20]

Karl Rove indictment claim[link]

On May 13, 2006, Leopold reported on Truthout that Karl Rove had been indicted by the grand jury investigating the Plame affair.^[21] Rove spokesman Mark Corallo denied the story, calling it "a complete fabrication".^[22] Truthout vigorously defended the story saying variously that it had two or three "independent sources," before the executive director, Marc Ash, issued a statement apologizing for “getting too far out in front of the news-cycle.” The grand jury concluded with no indictment of Rove.^[23]

In his memoir, Courage and Consequence, Karl Rove addressed the Leopold article. Rove writes that Leopold is a "nut with Internet access" and that "thirty-five reporters called [Robert] Luskin or Corallo to ask about the Truthout report." According to Rove, "Fitzgerald got a kick out of the fictitious account and e-mailed Luskin to see how he felt after such a long day."^[24]

Safety issues at BP[link]

Leopold's investigative reporting on safety issues at BP has been cited by CNN, 60 Minutes and the Los Angeles Times.

60 Minutes cited a report by Leopold, published at Truthout as a source for their episode on May 16, 2010, about the BP oil spill and the whistleblower who was warning about a possible blowout at another BP deepwater drilling site.^[25] Digital Journal wrote up the story and also cited the Truthout report.^[26] CNN's Randi Kaye in an article also cited a report by Leopold on Mark Kovak's inside knowledge about the safety concerns at the Prudhoe Bay, Alaska BP oil field.^[27] On July 8, 2010, Los Angeles Times reporter Kim Murphy cited Leopold's investigation into neglect and cost-cutting practices at Alyeska Pipeline in her report on the resignation of Alyeska's CEO one day after Leopold's report was published at Truthout.^[28] On July 14, 2010, the United States House of Representatives Committee on Transportation and Infrastructure held a hearing in the Subcommittee on Railroads, Pipelines and Hazardous Materials. The hearing,^[29] titled "The Safety of Hazardous Liquid Pipelines (Part 2): Integrity Management," cited an investigative report by Leopold, published at Truthout as a document for the committee's investigation.^[30]

Air Force training material[link]

In 2011, Truthout featured a story by Leopold about religious material used by the US Air Force in the training of officers on the ethics of nuclear war. The material, obtained by the Military Religious Freedom Foundation from Freedom of Information Act requests, includes slides quoting the Bible supporting the act of war and characters from the Bible fighting what the slides refer to as just wars, as well as quotes from former Nazi Wernher von Braun.^[31] The Air Force removed the material from its training regime a day after Leopold's story was published, with David Smith, chief of public affairs of Air Education and Training Command, telling Leopold (The material) "has been taken out of the curriculum and is being reviewed," and "The commander reviewed it and decided we needed to have a good hard look at it and make sure it reflected views of modern society."^[32]

Awards and achievements[link]

Leopold's stories have appeared three times on Project Censored's top-25 under-reported stories of the year: once in 2004, for a story he wrote about an alleged secret meeting Arnold Schwarzenegger had with Ken Lay prior to the film star's being elected Governor of California.^[33] for a story he wrote on Halliburton in 2005.^[34] and again in 2011 for a story he wrote on a controversial "spiritual fitness test" the Army required all of its enlisted soldiers to take.^[35]

In 2008, Leopold received the Thomas Jefferson Award from the Military Religious Freedom Foundation.^[36]

Bibliography[link]

• News Junkie, 2006 (ISBN 0-9760822-4-1).

References[link]

External links[link]

• The Public Record
• Jason Leopold - Breaking the Enron Scandal on YouTube
• Audio profile on WBEZ's Love + Radio

Jeffrey Skilling
Mug shot of Skilling taken in 2004
Born	(1953-11-25) November 25, 1953 (age 58) Pittsburgh, Pennsylvania, U.S.
Charge(s)	Conspiracy, securities fraud, false statement, insider trading
Penalty	Originally sentenced to 24 years and 4 months and fined $45 million USD, pending re-sentencing
Status	Incarcerated
Occupation	former president of Enron
Spouse	Rebecca Carter
Children	Three (one deceased)

Jeffrey Keith "Jeff" Skilling (born November 25, 1953) is the former president of Enron Corporation, headquartered in Houston, Texas. In 2006 he was convicted of multiple federal felony charges relating to Enron's financial collapse, and is currently serving a 24-year, four-month prison sentence at the Federal Correctional Institution in Englewood, Colorado.^[1][2] The Supreme Court of the United States heard arguments in the appeal of the case March 1, 2010.^[3][4] On June 24, 2010, the Supreme Court vacated part of Skilling's conviction and sent the case back to the lower court for further proceedings. In April, 2011 a three judge 5th Circuit Court panel ruled that the verdict would have been the same despite the legal issues under discussion, and Skilling's conviction was upheld.^[5] Skilling appealed this new decision to the Supreme Court,^[6] but was denied certiorari.^[7]

Personal life[link]

Skilling was born in Pittsburgh, Pennsylvania, and was the second of four children. He grew up in New Jersey and Aurora, Illinois. When he was 16, he worked at WLXT (channel 60), a UHF television station in Aurora.

After graduating from West Aurora High School, Skilling received his B.S. in applied science at Southern Methodist University in 1975, where he was a member of Beta Theta Pi (Kenneth Lay was also a member of the fraternity). During his admissions interview for Harvard Business School, he stated that he was asked if he was smart, to which he supposedly replied, "I'm fucking smart."^[8] Skilling earned his M.B.A. from Harvard Business School in 1979. He became a consultant at McKinsey & Company in the energy and chemical consulting practices. Skilling became one of the youngest partners in the history of McKinsey.^[9]

Skilling had a daughter and two sons (ages 22, 20, and 16) at the time of his conviction, from his first marriage, which ended in divorce in 1997. His youngest child, John Taylor "JT" Skilling, aged 20, was found dead in his Santa Ana, California, apartment on February 3, 2011, by what police have preliminarily determined was the result of a drug overdose.^[10] In March 2002, Skilling married Rebecca Carter, a former vice president for board communications and board secretary at Enron. He is the younger brother of Tom Skilling, the chief meteorologist at CW affiliate/cable superstation WGN-TV in Chicago, Illinois.

Jeffrey Skilling was arrested in New York City on April 9, 2004, for public intoxication, during which he harassed several passersby and accused them of being undercover FBI agents. Police responding to the 911 calls found him uncooperative and concluded that he needed to sober up in the local jail.^[11]

Enron[link]

Skilling started his career in Houston as an analyst for First City Bancorporation of Texas in Houston. First City was one of Enron's banks and just before it failed the first time, Skilling quit.^{[citation needed]} The CEO of Collecting Bank, the FDIC's facility for managing the bad assets of First City, was Sam Segnar, the first CEO and chairman of Enron. The new First City Bank, headed by A. Robert Abboud, was also an Enron bank. Abboud was the former president of First Chicago Bank and Occidental Petroleum under Armand Hammer.^{[citation needed]} First City was founded by Judge James Andersen Elkins and his law firm, Vinson & Elkins, one of Enron's lead law firms. As a consultant for McKinsey & Company, Skilling worked with Enron in 1987, helping the company create a forward market in natural gas. Skilling impressed Kenneth Lay in his capacity as a consultant, and was hired by Lay in 1990 as chairman and chief executive officer of Enron Finance Corp. In 1991, he became the chairman of Enron Gas Services Co., which was a result of the merger of Enron Gas Marketing and Enron Finance Corp. Skilling was named CEO and managing director of Enron Capital & Trade Resources, which was the subsidiary responsible for energy trading and marketing. He was promoted to president and chief operating officer of Enron in 1997, second only to Lay, while remaining the head of Enron Capital & Trade Resources. In 1999, Enron launched EnronOnline, an Internet-based trading operation, which was used by virtually every energy company in the U.S.

Under Skilling, Enron adopted mark to market accounting, in which anticipated future profits from any deal were accounted for by recording their present value rather than historical cost. Skilling joked about the California energy crisis at one meeting of Enron employees by asking, "What is the difference between California and the Titanic? At least when the Titanic went down, the lights were on."^[12] Skilling later attributed the remark to frayed relations between Enron and California.^[13] His employees, meanwhile, plotted to keep the price of energy high in California.^[14]