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Joseph Romm and Enron: For the Record

[Editor note: Also see "Joseph Romm and Enron: More for the Record" (May 8, 2009) and "Enron and Waxman-Markey: Response to Joe Romm" (July 2, 2009)]

The headline at Climate Progress, the blog site of Joseph Romm, senior fellow at the Center for American Progress, read:

MYSTERIOUS INDUSTRY FRONT-GROUP AFFILIATED WITH KEN LAY’S FORMER SPEECHWRITER LAUNCHES ANTI-WAXMAN-MARKEY ADS WITH PHONY MIT COST FIGURE

And here is what Romm specifically says about me:

Who is the [American Energy Alliance]?  Good question.  The AEA says on its website:

“AEA is an independent affiliate of the Institute for Energy Research (IER)….”Aside from the cryptic nature of the oxymoronic phrase “independent affiliate,” it is worth noting that the Institute for Energy Research “has received $307,000 from ExxonMobil since 1998.” The President of IER is one Robert Bradley “who previously served as Director of Public Policy Analysis at Enron, where he was a speechwriter for CEO Kenneth Lay,” who was “convicted on fraud and conspiracy charges on May 25, 2006.”

And here is what Romm said about me in March at Climate Progress:

So it is only fair to note that the myth articles were “produced with support from the Institute for Energy Research …. The President of IER is Robert Bradley ‘who previously served as Director of Public Policy Analysis at Enron, where he was a speechwriter for CEO Kenneth Lay,’ who was “convicted on fraud and conspiracy charges on May 25, 2006.”

’Nuff said on that.

His implication is that I am somewhere between a dunce and a fraud because of my association with Enron and Ken Lay. But Romm should know better. He and I had email wars when I was at Enron, and Joe was Enron’s cheerleader, even complaining to his “friends” there about me.

Here is the background, as told in my book Capitalism at Work (p. 311):

Turning from the supply side to the demand side, Enron excited environmentalists (as well as stock analysts) with Enron Energy Services (EES), known in the trade as an energy service company (ESCO). EES offered energy outsourcing services for large commercial and industrial customers under long-term contracts. Under these contracts, the company and Enron would split the energy-cost savings, at least theoretically. Who could complain about private-sector strategies that saved money and reduced energy usage and emissions at the same time?

EES co-chairman Thomas E. “Tom” White estimated the customer cost savings around 20 percent. Ken Lay put the energy-use savings near 10 percent, which inspired some within the company to advocate certifying customers as “Kyoto compliant” (the idea was ultimately rejected).

But such reductions were only the beginning, according to energy conservationists Amory Lovins and Joseph Romm. They preached in articles, books, and talks that so much more energy savings and greenhouse gas emission reductions were profitable that compliance with the Kyoto Protocol was possible, if not easy.

“ESCO’s are DEFINITELY the future,” Joe Romm emailed Enron. In his book Cool Companies (1999), Romm wrote: “Cool buildings that cut energy use—and hence greenhouse gas emissions—in half are increasingly commonplace.” He saw massive opportunities for easy savings. “The entire notion that low-hanging fruit is easily exhausted turns out to be a myth,” Romm wrote in italics.

EES bought 200 copies of Cool Companies to give to existing and potential customers. The respect was mutual. Enron is “a company I greatly respect,” Romm emailed.

Again, Romm was the  fan of Enron’s “energy sustainability” initiatives, not me. While he was lauding Enron to Enron, as well as to his external audiences, I was fighting Enron’s climate alarmism and “green” energy ploys (windpower, solar, etc.).  Some Enron executives wanted me fired, as documented in these  memos posted at Political Capitalism, and I paid the price for my views come compensation time.

So allow me to turn the tables. The public policies that Joseph Romm promotes today are the same ones that the late Ken Lay promoted during Enron’s heyday, as I have documented in Capitalism at Work. The party in power is also following the Enron playbook (see my Reason.tv video, Obama’s Enron Problem).clip_image002clip_image004

Romm Exaggeration and Enron Fraud

Romm’s Cool Companies was the calling card of one of Enron’s most fraudulent divisions, Enron Energy Services. EES was telling the world about all the energy savings they were capturing in their outsourcing contracts–savings that the customers themselves could not find with their own in-house energy engineering. But the contracts promised them savings, so many companies signed (see below). 

clip_image005

And sure enough, the easy fruit of energy savings was really not so easy to pick. Enron was manufacturing savings via “mark-to-model” accounting where arbitrary assumptions created paper (GAAP) profits that were net-present-valued and reported as current-quarter earnings. The grandiose claims in Cool Companies about easy costs savings (gee–the companies did not see it, but Enron’s smartest did!) were exactly what EES needed to get the customers–and analysts–to drink the Kool-aid.

And that’s why Joe Romm was Enron’s favorite, and Enron was Joe Romm’s favorite.

19 comments

1 Andrew { 05.04.09 at 1:10 pm }

My god, Romm gets more pathetic every day.

2 Ralph Hansen { 05.04.09 at 2:55 pm }

Good ole Joe. Fire up an ad hominem attack because his factual arguments are pitifully weak.

Why is it so difficult for Romm and the Obamaphiles to understand the fallacy of green jobs? Energy derived from wind, solar and other alternative sources is unrealiable, less efficient and requires more labor to produce. A third grader can do the math to show that doesn’t make economic sense.

Romm’s so-called debunking of the Seven Myths of Green Jobs is essentially a circular argument based on the promise of some magical new technology that will allow wind and solar to meet future consumer demand.

The fact of the matter is Romm’s vision of the world would have us living at rates of energy consumption like those of the 19th Century. Joe, you can have my kerosene lamp.

3 rbradley { 05.04.09 at 5:55 pm }

Romm did it again today–now it is three times and counting.

“[It's worth adding that the President of IER is one Robert Bradley 'who previously served as Director of Public Policy Analysis at Enron, where he was a speechwriter for CEO Kenneth Lay, who was 'convicted on fraud and conspiracy charges on May 25, 2006.']”

http://climateprogress.org/2009/05/04/heritage-foundation-green-jobs-dirty-energy-exxonmobil/

Let’s talk some more about Enron, Joe.

4 Marlo Lewis { 05.05.09 at 3:11 pm }

Guilt by association! Joe sets another benchmark for climate McCarthyism.

5 Ken Maize { 05.05.09 at 6:44 pm }

I’ve had my own run-ins with Joe Romm, and may do a
blog item at http://www.powermag.com on your latest.

Joe’s addicted to ad hominem, personal attacks. You worked for Enron, therefore you are a criminal and nothing you say can be valid (even if he was an Enron booster). I make my living as an energy journalist, not a PhD physicist from MIT, and therefore nothing I write is credible, unless I agree with Joe Romm, in which case, I’m a serious analyst.

Don’t confront the allegation, confront the alligator (didn’t that
come from Amos and Andy? But that would be racist).

Anyhow, Romm is a smart, sometimes funny, fraud.

6 rbradley { 05.05.09 at 8:55 pm }

This post is now getting hundreds of hits from Chris Horner’s mention at NRO’s Planet Gore.

For those interested in understanding the late Ken Lay’s “political capitalism” business model, and its reliance on CO2 pricing (seven profit centers no less), here is a sample from the book: http://www.mmscrivenerpress.com/pdf/Bradley_Intro.pdf

7 Demesure { 05.06.09 at 2:02 am }

Joseph Romm is an unfunny fraud, who is unable or unwilling to even remember his most recent blunders.
A quick guilt-by-association googling leads to his 2000 testimony before the US senate. The good doctor was warmly praising Enron as an energy provider model:

“Ocean Spray announced a $100 million deal with the energy services division of Enron, a major natural gas and utility company based in Houston. Enron will use its own capital to improve lighting, heating, cooling and motors and to invest in cogeneration (the simultaneous generation of electricity and steam onsite, which is highly efficient). Ocean Spray will save millions of dollars in energy costs, have more reliable power and cut pollution, without putting up any of its own capital. In September 1999, Owens Corning, the fiberglass insulation manufacturer, announced a similar $1 billion deal with Enron.”
(source : http://enduse.lbl.gov/Projects/rommtestimony000921.pdf )

In another random 2000 archive, here was Romm’s take on Enron again:

“We believe energy outsourcers like Enron (discussed below) may ultimately manage hundreds if not thousands of buildings over the Internet.”
(source : http://www.rand.org/scitech/stpi/Evision/Supplement/romm.pdf)

8 westWright { 05.06.09 at 8:03 am }

Thanks Robert Bradley, I found your site via NRO Planet Gore and have added to my favs.

9 rbradley { 05.06.09 at 9:55 am }

Demesure:

Very interesting research–thank you.

I have more emails from Joe Romm to Enron that I will share in time. Also note that Enron Energy Services was dissolved, not sold, with Enron’s bankruptcy. Its energy outsourcing contracts were money losers. Romm’s dream division at Enron was a fraud.

10 Chris Bolts Sr. { 05.06.09 at 6:43 pm }

I came over from NRO’s Planet Gore and I always like how our guys on the conservative side argue with facts and rational analysis without resorting to ad hominem attacks. Unfortunately, the same can almost never be said about the Left. I still can’t even wrap my mind around how they believe that mankind can affect the weather, but the Left, which I though was supposed to be enlightened and convinced by reason, has fallen for this belief hook, line and sinker. Keep up the good work.

11 Ken Maize { 05.07.09 at 5:45 pm }

As tendentious and mendacious as Joe Romm is today, I wouldn’t necessarily fault him for his rose-colored-glasses view of Enron in 1999. Many of us were mind-f—–, with the exception of Rob Bradley and a few others.

On the other hand, as a reporter I’d known Ken Lay since the mid-1980s (including the ill-fated nomenclature explosion of Enteron). My experience was with a guy who, I concluded, was much more interested in government policy and politics than in running a business. In those days, Richard Kinder kept the business balls juggled while Lay played games in Washington.

When Kinder got passed over in favor of Jeff Skilling (the empressario of virtual businesses), the balls started falling out of the air. Kinder went on to great success, focusing on fundamentals of gas transmission. Enron, of course, collapsed like the House of Usher.

An anecdote that might be of interest. In 1992, when I was serving as a consultant to non-utility generators, one of them (the late Cogen Technologies) asked me to represent the company’s interests at an RNC-concocted event to draft an energy platform for the upcoming Republican convention. Tom Korologos ran the event. I laughed when I accepted the job, as I am a Democrat. But my client didn’t care. They just wanted someone at the table who understood energy politics and its part of the business.

The whole thing, of course, was a sham designed to raise energy company money for the GOP. It was a pay-to-play deal, with each company at the table kicking in $2,000 for a seat. I took another $2,000 for about two-days work.

After the first meeting, I wrote a draft platform plank on energy. It was goof-and-spoof: classic Republican red meat. No subsidies, reduce regulation, free-up markets, end utility monopolies, etc. Get rid of DOE. Drill, drill, drill. I knew the drill very well.

When we met again (I think it was at the Hay-Adams, maybe the Willard), many of the folks there shook my hand and told me how much they admired my draft platform plank. A guy from Bechtel positively groaned in pleasure.

Then the group adopted draft language entirely in the opposite direction — supporting continued and greater subsidies for such things as Section 29 (coal-bed methane) gas, alleged synfuels. more DOE R&D and CRADAs, etc. It could have been written by J. Bennett Johnston.

Sitting at the table for the first time, smiling like the Cheshire cat, was Ken Lay. It was Enron’s “plank” that the fund-raising RNC group adopted.

Of course, as I knew at the time, the whole exercise was meaningless, as the GOP adopted a very different plank — I don’t even remember what it was, except that it was entirely anodyne — and Bill Clinton went on to wax GHWB in the general election, where energy was an entirely insignificant issue.

That’s one of my recollections of Key Lay’s approach to management. I have more (has anyone heard of Intellibridge?) , but they begin to get boring.

Ken Maize

12 Richard W. Fulmer { 05.08.09 at 1:27 pm }

In his book, “The Quest for Cosmic Justice,” Thomas Sowell writes:
“… Einstein insisted from the outset that his theory of relativity must be checked against observable facts before it could be accepted – and so it was, by scientists around the world, including those scientists who were initially skeptical, but who became convinced by the evidence of their own experiments.”

Note that Einstein did not simply declare that the “science was settled.” Nor, it appears, did he ever call anyone who doubted his theory a “denier” or threaten any such person with a Nuremburg-like trial.

13 rbradley { 05.08.09 at 4:31 pm }

Ken:

Thank you very much for your Ken Lay observations. That adds to the historical record. I hope others join in with there recollections. And sorry I had to edit one word–some of our readers might be under aged!

14 Enron vs. Exxon Mobil: Polar Approaches to Energy and Public Policy — MasterResource { 06.15.09 at 7:41 am }

[...] Enron Energy Services, the energy outsourcing division of Enron that so excited environmentalists (including Joe Romm, now blogging at Climate Progress), was one of the company’s biggest frauds. [...]

15 Market Conservation vs. Government Conservationism: Understanding the Limits to Energy Efficiency and ‘New-Economy’ ESCOs — MasterResource { 06.25.09 at 1:00 am }

[...] energy outsourcing division of the late Enron, was the next great thing, thought Amory Lovins and Joseph Romm, the gurus of less is more. Energy savings were easy pickings, and Enron would help lead large [...]

16 Enron and Waxman-Markey: Response to Joe Romm — MasterResource { 07.02.09 at 7:05 am }

[...] division of Enron, Enron Energy Services. I offer evidence for this conclusion in two posts: Joe Romm and Enron: For the Record (May 5, 2009) and Joe Romm and Enron: More For the Record (May 8, [...]

17 150,000 and Counting –Thank You Viewers! — MasterResource { 07.28.09 at 7:57 am }

[...] climate alarmism/activism are just the opposite of the ones he draws. Stay tuned on this debate. Joseph Romm and Enron: For the Record 3,079 [...]

18 Worth Re-reading Weekend (MasterResource works for lazy summer days too) — MasterResource { 08.01.09 at 7:00 am }

[...] Joseph Romm and Enron: For the Record 3,079 Views [...]

19 More Deceit from Climate Progress, Center for American Progress (Is Joe Romm shooting himself in the foot?) — MasterResource { 08.25.09 at 9:05 am }

[...] Joseph Romm and Enron: for the Record (May 5, 2009) [...]

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