A federal grand jury in San Francisco has returned a six-count indictment against a unit of Reliant Resources Inc. (RRI) and four of its officers in connection with a 17-month federal criminal investigation of the manipulation of California's energy markets.
The indictment alleged that in June 2000, Houston-based Reliant Energy Services Inc. intentionally drove up the price of electricity in California by shutting off its power generation to create the appearance of a shortage. As a result, the company allegedly reaped millions of dollars in illegal profits.
In one phone conversation a few days after the company allegedly first shut down power plants, a Reliant trader explained: "It started out on Monday losing $3 million, market just fell out of bed. So, then we decided as a group that we were going to make it go back up, so we turned like about almost every plant off. It worked. Prices went back up. Made back almost $4 million, actually more than that, $5 million."One hopes that this will be the first of many indictments, but it seems more likely that other companies involved in the market manipulations will get away with paying fines. According to the Contra Costa Times, "prosecutors said the decision to charge the company was based, at least partly, on its refusal to fully cooperate with the investigation." So probably the others will fall in line, release documents, behave contritely, and give up some portion of the enormous profits they won from choking off California's energy supply.
But still, it was nice that Ashcroft and his Justice Department took a few minutes off from their critical antipornography operation to announce the indictments. [Insert your own joke about "the real obscenity" here.]