Enron Corp. boss says he’s not to blame for profits in energy crisis

The Associated Press
Monday March 05, 2001

SAN FRANCISCO – Yes, his business has profited handsomely from California’s energy crisis, but Enron Corp. Chairman Kenneth Lay says he shouldn’t be a scapegoat in California’s energy crisis. 

That hasn’t swayed Gov. Gray Davis, who has skewered energy companies such as Houston-based Enron for selling expensive power to California. 

“Never again can we allow out-of-state profiteers to hold Californians hostage,” Davis warned in his State of the State address. 

More recently, however, Davis called Lay to discuss negotiations as the state looks to buy power transmission lines from troubled utilities. 

“I told him we couldn’t support it,” Lay told the San Francisco Chronicle in an interview at his Houston office. “It will lead to an even less efficient transmission grid and, longer term, it could make things worse.” 

Lay is not just any private-sector energy czar — Enron Corp. is the world’s largest energy trader and Lay is a close friend of President George Bush. Lay and his corporation have donated more than $500,000 to Bush’s various political campaigns in recent years and he offered Bush use of Enron’s private jet during the presidential race. 

But Lay said it’s economics, not politics, that matter in California’s energy crisis. And he thinks it unfair that Davis has blamed out-of-state energy brokers for the protracted problems. 

“We didn’t make the rules in California,” Lay said. “We had nothing to do with creating the problem.” 

The problem, many analysts agree, began with the state’s deregulation of the power industry in 1996. Enron encouraged deregulation, and the state’s ensuing power crisis has been lucrative for the corporation. 

Enron’s stock jumped 86 percent in 2000 and its revenues more than doubled to $101 billion. Lay, 58, was compensated accordingly — he received nearly $16 million in stock and cash beyond his $1.3 million salary last year, compared with less than $4 million in bonuses in 1999. 

Lay refused to say how much Enron has made off California’s crisis, though he conceded the profit was “not inconsequential.” 

“We benefit from the volatility,” said Lay, who took over Enron in 1985 and has helped turn the corporation into a major player in the trading of electricity as a commodity. 

But Lay rejected suggestions that Enron has manipulated prices upward by insisting California pay dearly for last-minute power that has helped keep the lights on in recent months. 

“I don’t know of any of that,” he said. “It’s so easy to conjure up conspiracy theories.”