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Former Senator Steve Peace Who Called Enron Scandal Considers CCAs, And...

by Jeff Powers, published

"CCAs can be good things, but they can also be dangerously manipulated by the exact same energy companies who created the energy crisis." ~ Former Senator Steve Peace

San Diego, CA.- Former Senator Steve Peace knows a little something about energy and the critical relationship between the end user and those who provide electricity.

Peace was chairman of the Senate Committee on Energy from 1995-1997. It was during this time that the energy deregulation bill, AB 1890, written by Jim Brulte, was passed by the California Legislature and signed by then Governor Pete Wilson.

When the energy crisis erupted 4 years later, Peace immediately pointed to Enron.

With that attention, Enron mounted a massive and successful media manipulation campaign, attacking Peace and fueling a false narrative, until the markets and the Courts finally unraveled the rouge company. After the dust settled, Enron CEO Jeff Skilling was in jail and hundreds of millions of dollars in refunds were returned to California.

Richard Lambert, editor of London's Financial Times from 1991 to 2001, in 2002 admitted the media's Enron failings. "The fact that Enron executives had for some time been selling their shares for all they were worth was public information. So were the company's links with the obscure off-balance-sheet partnerships that were subsequently to trigger its downfall."

What Happened With Enron?

By manipulating the price and amount of energy flowing into the market (a demand supply gap), Enron made billions of dollars.

In coordination with Enron executives, energy traders literally took power plants offline for days to increase the price of electricity. Traders then sold the remaining energy at premium rates.

The fallout was extraordinary.

Widespread rolling blackouts were the norm, impacting millions of end user customers.

And because California had a cap on retail electricity charges, the manipulation squeezed the energy providers margins, resulting in the bankruptcy of PG&E.

It was a mess.

What's a CCA?

Fast forward nearly 20 years and Peace is offering his views on CCAs, or the Community Choice Aggregation effort.

Community Choice Aggregation allows any city and/or county to form an entity and take over the responsibility for purchasing power for their community.

Should the San Diego City Council for example establish a CCA, here's what happens:

The utility keeps the transmission and customer service responsibilities, but the purchasing power is done by elected officials. Since elected officials don’t have expertise in energy markets, many CCAs hire third-parties with experience to perform the transactions.

If the San Diego City Council votes yes to form a CCA, and sources tell IVN it very well could happen, all the electric customers in the city are automatically signed up.

Customers can opt-out but it’s up to them to contact the CCA. The billing would still be done by the utility.

Peace Has CCA Concerns

In an interview on Beyond The Headlines, Peace was candid about his concerns with CCAs.

"CCAs can be good things, but they can also be dangerously manipulated by the exact same energy companies who were attempting to create an environment in which the business transaction is between individual consumers with a very limited amount of information or politicians, city council members with a limited amount of expertise," Peace continued, "and if the sellers on the other side can eliminate the oversight and the second look so to speak, it increases their odds of doing exactly what they did in the energy crisis."

Peace says while achieving clean energy goals are important, it doesn't necessarily mean CCAs represent the energy track to take, "That doesn't mean that those promoting CCAs don't have worthy goals and couldn't possibly achieve them in certain environments but their success, or lack of success is going to be totally dependent on the city council members at the end of the day."

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