When it emerged that NZers had apparently been overcharged 4.3 billion dollars by electricity companies using their market power, one word sprung to my mind. And it is a word I have yet to hear or read officially associated with this scandal.
How many times in the past years have we been told in dire terms of the imminent shortage of electricity, and how seriously me must conserve it. Oh, and because of the shortage, the wholesale price of electricity has to rise. Only, there never have been power cuts. I've had 19 winters in Christchurch and I have never experienced a power cut. But the price of electricity has increased, often on the back of perceived shortages.
Arguably one of the biggest industrial scandals of all time was when California suffered rolling electricity blackouts, allegedly because of diminished supply. It was, apparently, not because of lack of supply, but rather because Enron needed, one, to prop up their house of cards, and two, to make ever increasing profits for the top executives, who, while telling their investors to buy more and more Enron shares, were secretly dumping their own shares knowing that the house of cards was about to crumble.
There was no shortage of electricity in California. Blackouts were contrived to provide a reason to hike up the wholesale price. Enron traders were recorded laughing about this scenario and the potential profit it would bring. They were literally laughing all the way to the bank.
Isn't the connection palpable? Every winter we are warned of possible power cuts that never come. Every winter the price of electricity goes up, on the basis of that potential short supply.
While a little . . okay, a lot simplistic, the question should be raised whether, in context, Enron was a major contributing factor to the entire world recession. To bankrupt the world's fifth largest economy is no mean feat. That, on the back of the S&L fallout, certainly punctuated the global advance toward recession.
This makes interesting reading. I would love to see some of the connections to authority in New Zealand of those in charge of the electricity industry here.