Prior to the first Bush administration . . . wasn’t too different: Paul W. MacAvoy, The Natural Gas Market: Sixty Years of Regulation and Deregulation (New Haven, CT: Yale University Press, 2000), 1–120.
Senior managers . . . the growing natural gas marketplace: Hall, O’Neill, former senior Koch Industries trading executive speaking on background, interviews by author, 2013–16.
Koch went so far as to fold its origination group: Former senior Koch Industries trading executive speaking on background, interviews by author, 2016.
O’Neill spent his day on the phone: O’Neill, interviews by author, 2016.
Koch’s traders often got off work early . . . after US market trading ceased: O’Neill, Osbourn, Franklin, interviews by author, 2016.
Inside, the bar was pleasingly dim and cave-like: Notes and photos from author’s reporting trip inside the Ginger Man bar, 2016. Comparison with the Coates Bar taken from notes and photos from author’s reporting trip inside Coates Bar, 2015.
Koch had hired engineers to staff its trading desk: O’Neill, Osbourn, former senior Koch Industries trading executive speaking on background, interviews by author, 2016–17.
It might have been disappointing . . . wasn’t an easy path to riches: O’Neill, interviews by author, 2016.
Sam Soliman stretched his top traders: O’Neill, Franklin, Ming, interviews by author, 2016.
Here is a brief description of a derivatives contract: The author is indebted to Nancy Doyle, general attorney for the Commodities Futures Trading Commission, for letting him audit her class at Georgetown Law School, entitled Complex Derivative Transactions, during the spring semester of 2013. This class was absolutely invaluable in helping the author grasp the complex world of futures, derivatives, and swaps markets and the regulatory framework around them. The author was also assisted by his auditing classmate Lina Khan, who helped him work through complex issues during many long discussions. The author answered only one question during the class, which he answered incorrectly (which is mortifying to do in front of a group of competitive Georgetown Law students), but Doyle was exceedingly generous in taking time in and out of class to help clarify important elements of these opaque markets.
O’Neill started experimenting: O’Neill, interviews by author, 2016.
He was on an e-mail list . . . WinterSkinny: Koch Industries internal e-mail, subject line: “WinterSkinny.xls,” from Patrick Ferguson to Koch Industries traders including O’Neill, December 23, 2002.
Other internal reports, such as the Daily Analysis: Koch Industries internal e-mail, subject line: “Daily Analysis.xls,” including attachment and report, May 7, 2001.
These reports were coupled with . . . Plant managers: Former senior Koch Industries trading executive speaking on background, Hall, interviews by author, 2013–14.
In 2000, two Koch analysts . . . “Natural Gas Point of View 2000–2001”: Wayne Knupp and Blake Hill, Internal Koch Industries report, Koch Energy: Forecasts and Strategies—Focus on Gas. Natural Gas Point of View 2000–2001.
The assessment matched what O’Neill was seeing: O’Neill, interviews by author, 2016; historic natural gas prices taken from database of TradingEconomics.com.
In early 2000 . . . mistaken assumption: O’Neill, interviews by author, 2016; “Koch Fully Acquires Natural Gas Asset Management Company; Koch Energy Trading Increases Ownership Interest in IMDST to 100 Percent by Buying Out IMDCI,” BusinessWire, May 1, 2000.
Senior executives . . . no longer pay their traders like engineers: O’Neill, former Koch Industries trading executive speaking on background, interviews by author, 2016.
It was a cold winter in 2000. Demand for electricity was strong: O’Neill, interviews by author, 2016; historic natural gas prices taken from database of TradingEconomics.com; Natural Gas: Analysis of Changes in Market Price, GAO report to congressional committees and members of Congress, December 2002.
the entire pipeline company of Koch Gateway: Income figures, “Koch Gateway Pipeline Company Annual Report Form No. 2,” June 4, 2011, 114.
After the books were closed . . . time for O’Neill to get his bonus: O’Neill, interviews by author; O’Neill’s income figures were confirmed by a former senior Koch Industries trading executive speaking on background, interview by author, 2016.
With a single paycheck . . . economic life: O’Neill, interviews by author, 2016; figures on houses taken from housing deeds and Realtor.com databases.
CHAPTER 13: ATTACK OF THE KILLER ELECTRONS!
Koch’s trading division was always expanding: Beckett, Hall, former Koch Industries trading executives speaking on background, interviews by author, 2013–16. Documents from Federal Energy Regulatory Commission (FERC) proceedings detailed below.
The new commodity in this market was called a megawatt-hour: Bethany McLean and Peter Elkind, The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron (New York: Portfolio, 2003), 264–83; Toni Mack, “Power Players,” Forbes, May 19, 1997.
The company selected . . . the megawatt markets: Darrell Antrich’s account is based in part on prepared testimony he provided to federal regulators. It will be referred to in these endnotes as “FERC testimony.” For the first citation, the full document name is provided: “Prepared Testimony of Darrell W. Antrich on Behalf of Koch Energy Trading Inc., Before the Federal Energy Regulatory Commission, in Regard to San Diego Gas & Electric Co. v. Sellers of Energy and Ancillary Services into Markets Operated by the California Independent System Operator Corporation and the California Power Exchange,” October 25, 2011, 3.
Antrich helped build a team of traders: Antrich, FERC testimony, October 25, 2011, 3–7.
Darrell Antrich would end up getting engulfed by this disaster: Descriptions of Antrich’s personality from Beckett, speaking on background, interviews by author, 2016; Antrich, FERC testimony, October 2, 2003, December 3, 2003, September 17, 2009, October 25, 2011.
It is significant that the disaster began in Sacramento: Notes and photographs from author’s reporting trip to Sacramento, 2016.
That isn’t to say that Stephen Peace didn’t try: Stephen Peace, interviews by author, 2016.
Peace was put in charge . . . energy committee: Ibid.; Ron Russell, “Dim Bulbs,” SF Weekly, March 7, 2001; Chris Kraul, “Radical Changes in Power Industry Pass Legislature,” Los Angeles Times, September 1, 1996.
It only became apparent years later that Attack of the Killer Tomatoes! was prophetic: Peace, interviews by author, 2016; notes from watching Attack of the Killer Tomatoes!, 2016.
When Peace held public hearings . . . minuscule: Timothy P. Duane, “Regulation’s Rationale: Learning from the California Energy Crisis,” Yale Journal on Regulation, no. 2 (2002); “Historical Look at California’s Restructuring of Electricity Regulation: Influences Leading to the Legislature’s AB 1890 of 1996,” California Senate Office of Research.
Again, this is an excruciatingly dull story that nobody wanted to hear about: Peace, interviews by author, 2016; Dan Morain, “Assembly OKs Bill to Deregulate Electricity,” Los Angeles Times, August 31, 1996; Mark Gladstone, “Gridlock Gives Way to Teamwork in Legislature,” Los Angeles Times, September 2, 1996.
ALEC was an umbrella group . . . the nation: Bonnie Sue Cooper, former ALEC executive director, and Lisa Graves, executive director of the Center for Media and Democracy, interviews by author, 2014–16; Corporate America’s Trojan Horse in the States: The Untold Story Behind the American Legislative Exchange Council (New York: Natural Resources Defense Council and Defenders of Wildlife, 2002).