The Enron story has more twists and turns that a spy thriller. The company’s rise and fall was the corporate novel that Ayn Rand did not write–or need to write in retrospect.
Let history know that just-convicted Elizabeth Holmes, founder and CEO of defunct Theranos, is the daughter of a former Enron vice president, Christian Holmes, who peddled an environmental services product that never got off the ground.
Father and daughter … Enron and Theranos … imaging over reality. Whatever the level of connection, of causality, it happened. It is a footnote to history.
Elizabeth Holmes’s fraud was exposed by John Carreyrou reporter for the Wall Street Journal, who went on to author Bad Blood: Secrets and Lies in a Silicon Valley Startup. Regarding father Chris’s venture at Enron, I reprint my description from Enron Ascending: The Forgotten Years (2018).
Enron Environmental Services
In 1996, Enron created a profit center within Enron Capital & Trade Resources, Enron Environmental Services, to offer fully integrated environmental services to electric utilities seeking to minimize costs or maximize profits under regulatory constraints. (In Enron’s words: “monetize Clean Air Act and electricity deregulation opportunities.”)
EES’s mission statement read: “Optimizing environmental compliance through innovative technology, fuels, power, risk management, and finance.” The next year, Enron Environmental Services was renamed Clean Energy Solutions Group (CES) to avoid confusion with the new EES, Enron Energy Services.
Under Chris Holmes, CES’s staff of 13 stood ready to quantify and certify emissions reductions; offer insurance protection for international deal-making (under Joint Implementation guidelines); place forward, put, call, and spot transactions with any traded emission; and finance projects. Emissions trading for SO2 and NOX (as well as the potential regulation of CO2, whereby firms could receive credit for preregulation reductions), presented opportunities for a national market-maker such as Enron, which had been in this business since 1993.
Clean Energy Solutions, one of seven profit centers tied to the global-warming issue (in the specific form of priced and rationed CO2 emissions) never got off the ground. On one level, CO2 regulation was slow in coming at home. And facing certain if not unanimous defeat, the Kyoto Protocol would never be submitted to the Senate for ratification.
As important, or even more important, utilities maximized their profits by keeping their environmental activities inside the company, where expenses could be passed through and pollution-control investment could create rate base for profit making. And why do business with Enron? The vitriolic electric-restructuring debate, described in chapter 15, put Enron on the utilities’ black list. The environmental-outsourcing initiative of Chris Holmes would disband in 1998.
This NYT editorial by Bethany McLean compared Enron to Theranos: