Arnold's Enron Connection

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For Enron's Lay, the timing of the meeting was crucial. His company was just five months away from disintegrating, and he was doing everything in his power to keep his company afloat and the profits rolling in.

It wasn't until Enron collapsed in October 2001 and evidence of the company's manipulative trading tactics emerged that FERC began to take a look at the company's role in California's electricity crisis. Since then, memos written by former Enron traders were uncovered, with colorful names like "Fat Boy" and "Death Star," that contained the blueprint for the California energy scam.

Enron's top trader on the West Coast, Timothy Belden, the mastermind behind the scheme, pleaded guilty in December to conspiracy to commit wire fraud and has agreed to cooperate with federal investigators who are still trying to get to the bottom of the crisis.

California is still demanding that FERC order the energy companies to refund the state $8.9 billion for overcharging the state for electricity during its yearlong energy crisis. But FERC says California is due no more than $1.2 billion in refunds because the state still owes the energy companies $1.8 billion in unpaid power bills.

Davis, who refused to cave in to the demands of companies like Enron even while Democrats, Republicans, and the public criticized him, was right all along. Maybe Californians ought to cut Davis some slack.

Jason Leopold spent two years covering California's energy crisis as bureau chief of Dow Jones Newswires. He is currently writing a book on the crisis.

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