Attorney General Lockyer Announces Energy Crisis Settlement With Enron Valued At $1.52 Billion

Enron traders gave their manipulation schemes names like 'Death Star,' 'Fat Boy,' and 'Get Shorty.' These weren't corporate codenames—they were bragging rights. In recorded phone calls, traders boasted about 'stealing money from Grandma Millie' and 'bringing California to its knees.' The $1.52 billion settlement put a price tag on hubris—but the audiotapes proved something more valuable: the fraud was systematic, documented, and laughingly discussed by its perpetrators.

During 2000-2001, wholesale electricity prices in California rose 277%—from $7.4 billion to $27.1 billion. Enron's playbook exploited partial deregulation: 'Death Star' created artificial congestion then charged premiums to relieve it. 'Ricochet' bought California power cheap, exported it out of state, then sold it back at inflated prices. 'Fat Boy' overscheduled transmission to subsidiaries that didn't need it, then sold the 'excess.' FERC estimated total market manipulation damages between $40-45 billion.

The biological parallel is brood parasitism with teeth. Cuckoo birds exploit host birds by mimicking their eggs—but the host eventually recognizes the fraud and ejects the fake. Enron went further: they gamed the detection systems themselves. Enron exploited newly deregulated markets by mimicking legitimate trading signals while extracting value through systematic deception. The crisis revealed what happens when cheater-detection mechanisms lag behind cheater evolution: 49 days of rolling blackouts, PG&E's bankruptcy, and a political crisis that ended a governorship.

FERC's post-crisis admission was damning: they lacked the transaction data, staff, legal authority, and even a definition of market manipulation. The predator evolved faster than the ecosystem's immune system. In biological terms, every deregulation event creates new niches—and nature abhors a vacant niche.