http://blog.seattlepi.com/seattlepolitics/2011/07/07/bring-energy-manipulators-to-heel-cantwell/ Can someone explain what these "Death star", "Get Shorty" and "Fat Boy" schemes are??? Thanks.
JFGI son. "Death Star": Enron would overschedule its expected power transmissions to create the illusion that the state's grid would be overloaded, then receive state payment for "relieving" the congestion. The beauty of this con, the company's memos noted, is that "Enron gets paid for moving energy to relieve congestion without actually moving any energy or relieving any congestion." It's the sort of protection deal that would make Tony Soprano proud. "Fat Boy": This scam (aka "Inc-ing") also involved overscheduling power transmission -- for example, to a company subsidiary that didn't really need all of it. Then Enron would sell the "excess" power to the state at a premium. http://www.austinchronicle.com/news/2002-05-17/86618/ In order to do that you need to trade the actual real time energy, not financials. And no, it does not take a genius to think about it.
For what its worth I was talking to the chief economic officer of a well known large cap bank recently. In his words the energy markets are "all manipulated". If you don't have a large size or information advantage in these markets you are playing someone's else's game.
Markets always seem that way. Only reason I'm in the space is because the energy spreads move smoother than the outright flat price. No way on God's green earth I could ever trade energy directionally. Nope.