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Category — Enron legacy

Reasons to Sell Enron Wind (October 1998 memo to Ken Lay)

“Wind is almost a pure subsidy play, which means that Enron will be at odds with the market and must continually intervene into the political processes to extend subsides and/or create new ones. This is an expensive process and may trade away what we are lobbying for elsewhere.”

In my last seven (of 16) years at Enron, my title was Director of Public Policy Analysis. In this role, I was Enron’s libertarian, balancing, I suppose, Enron’s Left environmentalist John Palmisano, author of the infamous Kyoto memo of December 1997.

Enron had multiple profit centers around the global warming issue, which made my internal case for rejecting climate alarmism/policy activism an uphill one. But I got my licks in, including with some ‘e-mail wars’ with Palmisano. I have written numerous posts at MasterResource on Enron’s rent-seeking business strategy and will further set the historical record straight with a forthcoming book in Enron-inspired trilogy.

But my biggest disappointment as an Enron employee was when the company bought Zond Corporation in late 1996, soon to be renamed Enron Wind Company.

Enron never turned a profit with the acquisition–and even got into trouble with the National Audubon Society over a site north of Los Angeles where California Condors, an endangered species, were at risk. Enron’s purchase was as much about PR as it was about money-making, even with generous taxpayer subsidies. The ‘greens’ liked Enron more than just about any other company, and, indeed, Enron was a savior to the U.S. wind industry.

When a hush-hush memo went out that Enron Wind was for sale in mid-1998 (less than two years after its purchase), I wrote a memo to CEO Ken Lay with my reasons to sell the subsidiary.

Alas, Enron could not find a buyer at the price it wanted, and Enron Wind was part of the corporate bankruptcy filing of December 2001. GE bought Enron Wind just months later.

My memo to Lay, nearing its 15th anniversary, is reproduced verbatim. How does it read today? [Read more →]

August 22, 2013   1 Comment

Remembering When Enron Saved the U.S. Wind Industry (Best of MasterResource)

[Editor Note: This post by Robert Bradley Jr. from January 19th documents a fact that American Wind Energy Association might not want to know. If the American public understands why windpower is and must be government dependent to exist as an industry, and if the public knows about industrial wind's Enron roots, then the same public might just say: 'let's take our energy back'.]

January 7, 1997, some 13 years ago, was one of the worst days in my 16-year career at Enron. Enron had already entered into the solar business (1994) in partnership with Amoco (Solarex), and the U.S. wind industry was on its back. Zond Corporation was struggling, and  rival Kenetech had recently suspended its dividend and was on the way to  bankruptcy. Enron bought Zond on this day and renamed it Enron Wind Company.

Enron Wind would never turn a profit, and it would be sold in May 2002 by the bankrupt parent to GE. (GE and Enron would have other ominous parallels.)

Enron came in at just the right time for a troubled, undeserving industry by

  1. Putting a big-name corporation in the U.S. wind industry for the first time;
  2. Issuing countless press releases on ‘wonderful’ green wind for the next several years; and
  3. Successfully lobbying Texas politicians to enact the most strict renewable mandate in the country in 1999.

Regarding the third point, the Texas mandate created an unholy business-government alliance of sufficient size for the state to increase its renewable mandate in 2005. Texas is the leading wind power state in the country–but hardly by consumer choice. [Read more →]

September 4, 2010   9 Comments

Remembering When Enron Saved the U.S. Wind Industry (January 1997)

January 7, 1997, some 13 years ago, was one of the worst days in my 16-year career at Enron. Enron had already entered into the solar business (1994) in partnership with Amoco (Solarex), and the U.S. wind industry was on its back. Zond Corporation was struggling, and  rival Kenetech had recently suspended its dividend and was on the way to  bankruptcy. Enron bought Zond on this day and renamed it Enron Wind Company.

Enron Wind would never turn a profit, and it would be sold in May 2002 by the bankrupt parent to GE. (GE and Enron would have other ominous parallels.)

Enron came in at just the right time for a troubled, undeserving industry by

  1. Putting a big-name corporation in the U.S. wind industry for the first time;
  2. Issuing countless press releases on ‘wonderful’ green wind for the next several years; and
  3. Successfully lobbying Texas politicians to enact the most strict renewable mandate in the country in 1999.

Regarding the third point, the Texas mandate created an unholy business-government alliance of sufficient size for the state to increase its renewable mandate in 2005. Texas is the leading wind power state in the country–but hardly by consumer choice.

Right after Enron purchased Zond to enter into the wind business, I got a call from Hap Boyd, Enron Wind’s PR person. The Cato Institute had just published my windpower-cenric study, Renewable Energy: Not Cheap, Not ‘Green’ (August 1997), and Hap was trying to sell me on the benefits of wind. One of his arguments I remember was that landowners were receiving royalties from allowing the use of their land for wind turbines, as if this really meant something.

My relationship with Enron Wind went downhill from there. The head of the subsidiary wanted to get me fired for my public opposition against this technology (see the interoffice memos posted at my political Capitalism website).

Oh how sad I am that Enron purchased Zond and did so much to enable the artificial windpower boom in Texas and United States. Houston Chronicle business editorialist Loren Steffy wrote about this in a column, Wind Whispers of Enron (June 3, 2008). [Read more →]

January 19, 2010   3 Comments

Governor Rick Perry (R-TX), T. Boone Pickens, and the Enron Legacy of Windpower

Last December, Texas governor Rick Perry, speaking at a Houston fundraiser, sadly noted how President George W. Bush had lost his way in Washington, D.C. His good friend had compromised his principles and left the nation in a lurch, however unintentionally.

But then the governor launched into his Texas-is-great stump speech that included kudos to windpower, a new large industry (no) thanks to a legislative mandate requiring that Texas electricity retailers purchase qualifying renewable energy. (Wind is the most economical of the qualifiers.) The 1999 mandate, enacted with the crucial help of Enron lobbyists, was increased in 2002 with a powerful wind lobby at work. And so at  the point of a gun, Texas became the leading windpower state in the country, passing California along the way.

So it was not surprising that last Saturday night Gov. Perry handed T. Boone Pickens the 2009 Texan of the Year Award at a ceremony in New Braunfels, a town of 50,000 in the Texas Hill Country. [Read more →]

March 24, 2009   12 Comments