The strategies included arbitrage plays where Enron bought cheap energy earmarked for export outside California, only to sell it back to California at inflated prices. According to Enron memos from December 2000, this strategy did not present any problems, other than public relations risks that the firm was contributing to California’s ‘emergency’.
Enron traders also traded strategies where they artificially increased the power loads detailed on schedules submitted to the California Independent System Operator, which has responsibility for balancing generation and loads on California’s power grid. These so-called ‘fat-boy’ trades made the grid appear more congested than it actually was – again driving prices above their fair value.
A number of US senators, most notably Dianne Feinstein from California, have asked for long-term wholesale electricity contracts signed during the crisis to be renegotiated.