Winds of change or Enron’s ghost?

Andrew Fastow served as the chief financial officer of Enron Corporation, an energy trading company based in Houston.

He subsequently served a six-year prison sentence for crimes committed in this role. His sentencing judge said Fastow had “drunk the wine of greed”26cnd_fastow.190.2.

Excerpt:

In 1997 Fastow decided to take it one step further. That January, Enron bought a company called Zond, which owned wind farms.

Because wind farms provide alternative energy, they enjoy a legal status as qualifying facilities (QFs).

QFs get certain government-mandated benefits, such as higher rates from electric utilities, which are required to buy power from them. However, those benefits disappear if the QF is more than 50 per cent owned by a utility. In early 1997, Enron wasn’t a utility, but it was about to become one, because of its pending acquisition of Portland General.

From Enron’s point of view, the solution was simple: set up a special-purpose entity that would purchase Zond.

That way, Enron would retain full control of the asset while the wind farms would be able to keep their government-granted benefits. (So much for the free market.)

In May, Fastow and Kopper [Michael Kopper, an Enron employee] created two special-purpose entities known as the RADRs. The RADRs bought 50 per cent of Enron’s wind farms for approximately $17 million, 97 per cent of it a loan from Enron.

ENRONThis time, instead of turning to friends, Fastow and his wife, Lea, supplied most of the required $510,000 in independent equity themselves – but they hid the fact.

In May 1997, according to the government, Lea Fastow wired $419,000 to Kopper, who then funneled the money to two other investors, one of them also an Enron employee.

No one probed deeply enough to uncover this deception. Later, Southern California Edison, which had to buy power from the Enron wind farms, complained that it was overcharged by as much as $176 million from July 1997 to April 2002.

The Smartest Guys in the Room, The  Amazing Rise and Scandalous Fall of Enron, By Bethany McLean and Peter Elkind, Penguin 2003 p166-167

So we see the dirty ground in which the wind industry’s roots run deep. Ancient history, you say?

Not at all.

In 2008 The Houston Chronicle reported Texas is now experiencing some of America’s highest power rates because of the Enron deception.

Writes journalist Loren Steffy: “We like the idea of wind power because it seems natural and clean. Windmills, after all, are part of our pastoral vision of Americana — power, nostalgia and patriotism rolled into one. What’s not to like?

Only the economics. Wind power, despite the government’s best efforts to create a market, continues to be dogged by the same problems it always has: high costs, limited reliability and bad location.”

A former Enron employee says his old boss, Ken Lay, got onto the “global warming bandwagon” when it became a big issue in the summer of 1988.

You can read the full article by clicking the link above.turbine-Enron_1.5sl_1048

There’s so much about the wind industry which has a bad smell. We’ll tell you more over coming weeks. In the meantime, isn’t it about time its supporters stopped blaming the dog?

smiling-dog-2

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.

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