Enron Helped Push Electric Deregulation
By Jason White, Assistant Staff Writer
Enron has been among the most active players in state politics in recent years, lavishing over $1 million on state lawmakers during the 2000 election cycle alone. Its goal in doling out these dollars? Deregulation of electricity markets, experts say.
By most accounts, Enron was quite successful in achieving that goal. Twenty-five states have taken some steps toward deregulation, according to the Electric Power Supply Association, a Washington, D.C.-based trade group.
"They [Enron] were ahead of the curve," said Samantha Slater, manager of state and regional affairs for EPSA. "They were very good at getting to know who the players were, who they needed to talk to."
But for all its lobbying successes, Enron sometimes met serious and immovable roadblocks along the way -- entrenched utilities, energetic environmental and consumer groups, and a deregulation debacle called California.
A look at Enron's experience in Florida and Oregon -- the two leading recipients of Enron's largess in recent years -- shows that even Enron's money sometimes met its match.
In 1998 and 2000, Enron gave money to more candidates in Florida and Oregon than in any other state, even electricity giant California and Enron's home state of Texas, according to the National Institute on Money in State Politics. Eighty-seven Oregon lawmakers shared $74,719 in Enron money in 1998, surpassed only by the 102 Florida lawmakers who split $80,500 of Enron's money in 2000.
But in neither state was Enron successful in getting its way.
"Enron did not get what they wanted out of the [Public Utility Commission]," said Jason Eisdorfer, an attorney for the Oregon Citizens' Utility Board, an independent organization created by voter initiative in 1984 to represent residential utility customers.
Enron worked the system in Oregon from the inside, purchasing local power company Portland General Electric Co. in 1997. Shortly after the purchase, PGE proposed that it be allowed to bring competition to its 650,000 customers by selling its power generating assets and instead distributing electricity from other suppliers, including its parent company, Enron.
Cheered on by consumer and environmental groups, the Public Utility Commission rejected this proposal in early 1999, opting for a more gradual approach to deregulation. The PUC eventually approved limited markets for residential customers, giving them a portfolio of three pricing structures from which to choose, and open markets for industrial customers.
"What we're doing is a lot different than a lot of other states," said Commissioner Joan Smith of the PUC. "Market access only applies to very large customers." Fans of the PUC plan prefer the term restructuring to deregulation to describe Oregon's approach to electricity markets.
The new pricing system was scheduled to be up and running last October, but nervousness over California's nightmarish experience with deregulation prompted a delay until March 1 of this year.
"The thing that slowed things down is the California disaster," said Commissioner Smith. "Instead of starting things October 1, we decided to slow things down until prices stabilized."
Smith added that even with the March 1 date just around the corner, few large customers have indicated a willingness to test the waters of the open market: "It looks like we're throwing a party to which no one's coming."
Enron's deregulation push met with even less success in Florida. The state's electric industry is closed and figures to remain that way for some time to come.
"Any legislation regarding restructuring would take many years to come into play," said EPSA's Slater.
That more headway hasn't been made is a surprise to some observers given former Enron chief Ken Lay's personal relationship with Gov. Jeb Bush and an exploding electricity market ripe for reform. But these factors meant little in the face of entrenched local utilities and a growing fear among legislators that what happened in California could also happen in Florida.
In May 2000, Bush created a 17-member task force to study electric reliability and gas supply issues, with an eye towards opening up the state's energy markets to outside competition. Eight months later, in January 2001, the Florida Energy 2020 Study Commission proposed a plan to deregulate the wholesale electricity market, paving the way for companies like Enron to enter the state. But legislators didn't bite.
"The push for deregulation met with a pretty icy response in the legislature," said Jim Presswood, spokesman for the Southern Alliance for Clean Energy.
One reason for this is California's deregulation debacle. In March of last year, when Bush asked legislators to consider implementing the Commission's recommendations, rolling blackouts in California were dominating the headlines.
"The situation in California didn't help," EPSA's Slater said wryly.
Another reason is the political power and pull of the state's investor-owned utilities. Enron may have given more than $60,000 to Florida politicians during the 1998 election cycle, but that pales in comparison to the over $1 million donated by investor-owned utilities such as Florida Power & Light, TECO Energy Inc. and Florida Power Corp. In addition, these utilities employed dozens of well-connected lobbyists, some with close personal ties to Bush.
"These companies employ so many people in the state, they have been involved in the campaign cycle for years. Enron. . .can't fight that, " state Sen. Tom Lee told the Miami Herald.