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    Enron Research Paper

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    1. Research the Enron situation. To start, read the article "Virtual Bidding: Considerations Related to Market Manipulation" provided in Materials below. Find other sources.

    Based on your reading, take a stand on the ethics of Enron's activities in the California energy markets. Explain why you do or do not think Enron violated ethical standards and be specific about the ethical issues involved. Be sure to address the following:

    What standards should apply in this case?
    Who is ethically responsible for the situation in California?

    1,004 words with references

    © BrainMass Inc. brainmass.com June 4, 2020, 12:41 am ad1c9bdddf
    https://brainmass.com/business/business-management/enron-research-paper-353330

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    Demand and Supply Situation in California

    The population of California increased by 13% during the 1990s with no major power plants built to address the growing needs. The existing plants were made to increase in capacity to supply 30% more power. As a result California started depending on import of the excess requirement from Oregon and Washington. Since beginning California had been a propagator of in-house electricity generation which utilized natural gas which in turn produced lower emissions as opposed to coal that produced more toxins.

    In 2001, the drought of electricity in the northwestern states from which California used to import electricity led to reduced hydroelectric power available to California. Although California's total supply at no time was less than the demand, the state's energy reserves were low enough during peak hours. This situation exposed California's electricity grid managers to the risk of shutting down of plants under the tag of maintenance to make use of the situation and manipulate the supply and demand. These shut downs happened just to put managers in a position where they would be forced to purchase the electricity at the spot rate which was much higher than the normal rate. Since California preferred natural gas as the fuel and the prices of natural gas were responsible for determining the final rate of electricity, the natural gas industry started manipulating the prices that led to higher electricity rates.

    California Electricity Crisis

    The situation referred to as California electricity crisis was possible because of deregulation where prices of ...

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