Nevada and the fall of Enron

“But in the end, Enron has proved to be a house of cards, exaggerating its profits and hiding its debts in off-the-books partnerships. It’s troubling rise and ultimate fall raises serious questions about the judgment of Bush and other leaders who embraced it.”

—Bill Bradley, LA Weekly

Energy giant Enron Corp. finally fell Sunday when it filed for Chapter 11 bankruptcy protection. Houston-based Enron listed $24.7 billion in assets, the Associated Press reported. That’s some $38 billion less than two months ago. Those numbers made it the biggest dive ever.

What is Enron, and why do we care about its fiscal woes? On the national scale, the online zine describes Enron as the natural gas, electricity, pulp, paper and bandwidth trader named by Fortune readers as the most innovative U.S. corporation six years in a row. Leader Ken Lay of the Texas-based firm is a buddy of and campaign contributor to President Bush, who considered Lay for a power post in his cabinet.

In Nevada, Enron lobbyists have been busy in the state legislature trying to convince folks that utility deregulation—though a disaster in California—would have worked just fine here.

Enron had plans to buy some of Nevada’s power plants and, as it did in other states, stood ready to help us sort out our energy problems. So what if we didn’t have an energy problem? We would, surely, with Enron there to help.

Nevadans didn’t buy in completely. Legislators mindfully decided that hanging on to control of Nevada’s power-generating plants would be a good move. This, however, thwarted our own Sierra Pacific Resources’ move to buy Enron-owned Portland General Electric. If Sierra Pacific had bought the plant, it would have been one of the largest power companies in the West. It would have also become owner of a nuclear power plant—and thus would have had an interest, some speculated, in finding a good place to store its toxic goo.

Nevada legislators, at the last minute (technically, after the last minutes of the 2001 session), did cave to a partial deregulation that would allow big energy consumers like mines and casinos to shop around for juice. The static hadn’t stopped flying over this before Harrah’s announced that it had made a deal with a big energy provider. Enron.

Internationally, Enron Corp. has raised the ire of several human-rights organizations for its strong-arm tactics in the building of an energy facility in India. The juice plant displaced a couple thousand villagers and threatened to do irreparable environmental damage. When hapless residents tried to protest, local Indian government officials paid to “guard” the out-of-town power biz physically beat the protesters into submission and arrested them. In May, the India operation soured for Enron. At about the same time, stocks dropped and Enron’s CEO Jeffrey Skilling walked. It was the beginning of the end for Enron.

Who are the real victims of Enron’s collapse? It’s sure not Lay, who pocketed $150 million in stock purchases, or Skilling, who left with $70 million. Thousands of workers have lost jobs, and millions of small stockholders and folks with IRAs will lose large, while a very few—the ones at the top of Enron—make out like bandits.