FYI ?From the Contra Costa Times (East San Francisco Bay Area)
Published Friday, June 22, 2001
Texas energy exec says, 'I told you'
? Enron's Skilling gets pied before his speech blaming lawmakers, but says he understands Californians' anger
By Rick Jurgens
TIMES STAFF WRITER
SAN FRANCISCO -- A Texas energy executive who said his warnings were ignored by regulators who restructured California's electricity industry came to the Bay Area on Thursday to say, in effect, "I told you so."
Jeffrey Skilling, chief executive of Houston-based Enron Corp., said that California wouldn't be in its current mess if regulators had followed his advice in 1994 and 1995.
Regulators erred by forcing wholesale electricity transactions into the spot market so that deals could more easily be monitored, Skilling said in a speech to about 100 people at the Commonwealth Club of California. "They created a flawed marketplace in the name of regulatory expediency."
Enron is a broker that buys and sells contracts to deliver power. Such bilateral transactions shouldn't have been banned, Skilling said.
Skilling said that's what he said six years ago.
"I probably made a pest of myself (in the restructuring hearings called by regulators) because I told them they were doing it wrong," he said. "They finally told me to keep quiet."
On Thursday night, it was Skilling's turn to be pestered. A woman threw a chocolate pie into his face before the event began. Police said Francine Cavanaugh of Oakland was arrested on suspicion of battery and released.
Skilling tried to ignore protesters but said he understood why Californians, facing blackouts and rising power costs, were angry. He even had kind words for Gov. Gray Davis, who, he said, "was dealt a very difficult hand."
Skilling became Enron's chief executive in February, replacing company founder Kenneth Lay, an early proponent of electricity deregulation who is close to President Bush.
Enron, a global energy giant with roots in the natural gas industry, owns some power plants, but its influence in the electricity industry reflects the rapid growth of its energy trading operation.
Enron's only California generators are small wind facilities. However, the company has developed power plants. Enron initiated two 750-megawatt projects that were sold to Calpine Corp., including a Pittsburg plant due to go online next month. Enron has announced plans to seek regulators' approval for a 750-megawatt power plant in Roseville in Placer County.
During the first three months of 2001, Enron posted a huge jump in revenue, to $50.1 billion from $13.1 billion a year ago, but a much smaller gain in net income, to $425 million from $338 million. Skilling himself cashed an $850,000 paycheck and got a $5.6 million bonus last year.
But the energy crisis has taken its toll on Enron's stock price and on Skilling, who owned or held options to buy 1.9 million shares of Enron common stock at the time of the company's February proxy filing. At Thursday's closing price of $44.05 a share, the stock was down more than 50 percent from its 52-week high of $90.75 in August.
That proved that Enron wasn't the villain in California, Skilling said. "This thing in California has been bad for everybody," he said. "If we had anything to do with this, we're the stupidest people in the world."
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