May 15, 2002
12:00 AM
WASHINGTON, D.C. - Senator Frank H. Murkowski, Ranking Member of the Senate Energy Committee, today released the following statement at the Senate Energy and Natural Resources Committee hearing on Enron’s trading practices and FERC’s efforts to protect consumers. “Enron must shoulder the blame for their deceptions and misdeeds, but we can’t blame the entire industry. Moreover, bad decisions by the State, the Governor, and many others only made the situation worse. So I ask: Why was the California market vulnerable to manipulation? Did Enron cause California’s problems -- or did it and other traders just take advantage of a flawed system? “We already know the answers to these questions: The State of California created a dysfunctional market. Market participants such as Enron may have taken advantage of the weaknesses in the California program -- but California only has itself to blame for creating a flawed system in the first place. It should come as no surprise that if you create a flawed system, riddled with loopholes, people will take advantage of it. “California’s flawed program resulted in price spikes and power shortages. It drove one of its three major investor-owned utilities into bankruptcy, and the other two to the brink of bankruptcy. California’s program resulted in price spikes and power shortages. “While we all want to prevent price manipulation and have punished those who violated the law, we must be careful to not presume that an entire industry is guilty based on partial information about a single participant. It is important to note that California did not deregulate the market, and the forces of supply and demand were not allowed. Moreover, if we want prevent a repetition of California’s price spikes and power blackouts, we need to fix California’s flawed system. ###