Analysis of Market Manipulation

The California electricity crisis of 2000 and 2001 was reputed to have resulted from the gaming of a partially deregulated California energy system by energy companies such as Enron and Reliant Energy. The energy crisis was characterized by a combination of extremely high prices and rolling blackouts. Due to price controls, utility companies were paying more for electricity than they were allowed to charge customers, forcing the bankruptcy of PG & Electric and the public bail out of Southern California Edison. CFP was hired by Duke Energy to conduct an extensive 2-year analysis of all aspects of the Western energy markets including the utilization of generators, pricing and bidding behavior in light of demand and supply shocks, market imperfections and trading oddities. We worked closely with both the client and outside counsel to prepare testimony and economic analysis given before the Federal Energy Regulatory Commission, the California Senate, and offices of the State’s Attorney General. Ultimately, Duke was not exposed to the same type of scrutiny that led to the downfalls of Enron and Reliant.