Election Section

Employee complained of Perot’s involvement in energy market

By Jennifer Coleman, The Associated Press
Saturday June 08, 2002

Perot Corp. designed the computer system, accused  

of peddling information 


SACRAMENTO – A San Diego Gas and Electric Co. employee complained to state grid managers in 1997 that Perot Systems Corp. was peddling “insider information” about California’s energy market — a market for which Perot designed the computer system, a state senator said Friday. 

A computerized presentation by Perot Systems was found among documents turned over by Reliant Energy to the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market. 

Sen. Joe Dunn, D-Santa Ana, the committee chairman, said Friday the presentation by the Plano, Texas-based firm went “far beyond the ethical line” by showing energy generators how to exploit “holes” in the state’s market. 

Perot Systems helped create the computer system for the California Independent System Operator, which manages the state’s power grid and real-time energy market. The software company was founded by former presidential contender H. Ross Perot, who is the company’s chairman. 

The 44-page presentation describes the California energy market and includes strategies that Dunn called a blueprint on how to game the energy market through the ISO and the California Power Exchange, the now-bankrupt day-ahead energy trading floor. 

“Perot Systems discovered a ’hole’ in the ISO’s protocols for buying, selling and pricing imbalance energy,” the presentation said, which “allowed strategies that would destabilize the market.” 

Some of the strategies outlined by Perot System mirror those in a recently disclosed Enron Corp. memo with names such as Fat Boy and Deathstar, Dunn said. He has asked several energy trade associations and Perot System to retain any documents relating to the presentation. 

Perot Systems didn’t immediately return a call seeking comment, but has strongly denied any wrongdoing. 

On Thursday, Perot Systems filed two versions of the presentation with the Securities and Exchange Commission. Those copies were “substantially” different than the one found in Reliant’s documents, Dunn said. 

Dunn said he believes that one version was the presentation that the former SDG&E executive, who was also an ISO and Power Exchange board member, complained of to the ISO. He said the second version was likely revised after the ISO objected. 

Dunn said he was most concerned about the pages found only in the document Reliant turned over, “particularly the example they show in the latter pages on how to game the system or how to exploit the weaknesses of the system.” 

Perot officials said the presentation to Reliant was based on publicly available information and merely explained California’s market. 

That may be true, said ISO general counsel Charles Robinson, but “we don’t know what was said during the slide presentation. 

“Were I management at the time, I would have been quite concerned that a prior vendor of mine was going outside to the market to show how to game my market rules,” Robinson said. 

On Thursday, Ross Perot denied a conflict of interest, saying his company had the written approval of California’s ISO to share information about the market with others. 

Dunn and ISO officials said that was not true. 

“Contrary to any impression that Perot Systems may have tried to make yesterday that ISO ’approved’ any version of the Perot Systems presentation — they did not,” Dunn said. 

Robinson said he was trying to find the ISO’s former CEO who complained to Perot in 1997 to determine if he had verbally approved the presentation, but hadn’t found any letters that had approved it. 

Perot told stock analysts Thursday that the company would cooperate fully with California officials. The state attorney general has subpoenaed Perot Systems for additional information about its services to energy companies accused of manipulating the state’s power market to boost profits. 

Gov. Gray Davis asked the Federal Energy Regulatory Commission to investigate Perot Systems’ role in California’s energy crisis, saying it appeared that the company offered “a seminar on how market participants could game the ISO and the PX.”