a story line emerged about the electricity crisis: Russell, “Dim Bulbs”; McLean and Elkind, Smartest Guys, 264–83; Wendy Zellner, “Enron’s Power Play,” Bloomberg Businessweek, February 12, 2001.
This narrative was misleading: Peace, interviews by author, 2016; 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,” California Senate Office of Research; Morain, “Assembly OKs Bill”; Gladstone, “Gridlock Gives Way to Teamwork.”
On November 20, 2000, Koch Industries . . . in California: Antrich, FERC testimony, December 3, 2003, 3.
Koch walked away from: Unsigned consulting agreement between KET and PNM, dated November 20, 2000, and addressed to Melissa Beckett.
Other firms ramped up . . . got more expensive: FERC Opinion No. 536, “Order Affirming Factual Findings, Directing Compliance Filing and Ordering Refunds,” November 10, 2014, 62; Enron activities, McLean and Elkind, Smartest Guys, 264–83.
Back in 1968, when the oil gauger Phil Dubose: Dubose, interviews by author, 2014–15.
Koch’s priorities in the winter of 2000 were telling: Antrich, FERC testimony, October 2, 2003, 3; Antrich to Nesmith, e-mail, May 5, 2000. Antrich wrote: “Remember when you commit to a date to insist on golf for an afternoon.” Meeting agenda with heading: “PNM/KET Knowledge Alliance Meeting,” September 13, 2000. Agenda items include: “Tour of Trading Floor,” “Risk Management and Controls,” “Trading Alliance Discussion,” and “Power Trading Capabilities.” Also KET internally produced slideshow for PNM, dated April 26, 2000. Slides include: “Power Trading Profitability,” “Competitive Advantages of Koch Power Trading Group,” and “Potential Business Opportunities.”
The California crisis ended in April: Taylor et al., Market Power and Market Manipulation in Energy Markets, 79–83; FERC Final Report on Price Manipulation in Western Markets, March 2003.
Enron declared bankruptcy in December of 2001: Case file, San Diego Gas & Electric Co. v. Sellers of Energy and Ancillary Services; FERC Opinion No. 536, Order Affirming Factual Findings, Directing Compliance Filing and Ordering Refunds, November 10, 2014, 62; FERC Order Approving Uncontested Settlement with Koch Energy Trading and others, October 8, 2015.
Steve Peace’s life in politics was also ended: Peace, interviews by author, 2016.
After the electricity markets cooled . . . never quite so white hot again: Beckett, speaking on background, interviews by author, 2016–17; Taylor et al., Market Power and Market Manipulation in Energy Markets, 79–83.
CHAPTER 14: TRADING THE REAL WORLD
To the private equity world . . . a game board: Eileen Appelbaum and Rosemary Batt, Private Equity at Work: When Wall Street Manages Main Street (New York: Russell Sage Foundation, 2014); Daniel Souleles, interviews by author, 2017; Souleles, Songs of Profit, Songs of Loss: Private Equity, Wealth, and Inequality (Lincoln: University of Nebraska Press, 2019).
$91 billion in private deals at the dawn of the century: Appelbaum and Batt, Private Equity at Work, 35–36.
Koch Industries . . . put itself aggressively into the hunt: Feilmeier, Hall, Packebush, Chase Koch, interviews by author, 2013–18.
Charles Koch sat on the Corporate Development Board: Charles Koch, Feilmeier, Hall, Markel, Jeremy Jones, Packebush, former senior Koch Industries executive speaking on background, interviews by author, 2013–14.
If going before the board . . . doubly intimidating to Steve Packebush: Packebush, Watson, interviews by author, 2013–16.
But in 2003, Steve Packebush . . . made an appointment: Packebush, interview by author, 2013.
The Koch Nitrogen team . . . took their places: Ibid.; background on development board meetings: Hall, Feilmeier, Jeremy Jones, interviews by author, 2013–14.
Koch Industries . . . since at least the 1990s: Watson, interviews by author, 2016; Joe Hise, former Farmland Industries fertilizer sales manager in Enid, Oklahoma, interviews by author, 2014–15.
Farmland would, in fact, collapse . . . destroyed it: Bob Terry, former Farmland Industries CEO, interview by author, 2013; “Farmland Industries Files for Protection Under Chapter 11,” GrainNet, last modified May 31, 2002; David Barboza, “Facing Huge Debt, Large Farm Co-op Is Closing Down; Farmland Industries Battled Major Food Conglomerates,” New York Times, September 16, 2003.
Packebush and his team . . . identified something that no one else saw: Packebush, interview by author, 2013.
he and the development board considered the plan: Hall, Markel, Charles Koch, interviews by author, 2013–15.
The development board . . . all three of these criteria: Packebush, interview by author, 2013; Leonard, “The New Koch.”
The timing was perfect. Farmland’s CEO, Bob Terry: Bob Terry, interview by author, 2013.
The delegation . . . mild spring day: Packebush, interview by author, 2013; weather conditions from historic weather database; Nancy Seewald, “Koch Wins Farmland’s Fertilizer Assets,” Chemical Week, April 2, 2003; Barboza, “Facing Huge Debt”; images of Farmland mural taken from online archive.
The American economy in 2003: Souleles, interviews by author, 2017; Appelbaum and Batt, Private Equity at Work, 18–21.
Between 2000 and 2012 . . . took companies private: Applebaum and Batt, Private Equity at Work, 37.
There was a large table: Packebush, Terry, interviews by author, 2013.
Agrium was the largest . . . producer: Robert Westervelt, “Full-Year Earnings Disappoint,” Chemical Week, May 21, 2003; Seewald, “Koch Wins.”
The glossy photos . . . were taken down: Packebush, interview by author, 2013; notes from Packebush’s office, 2013.
Koch Nitrogen was renamed Koch Fertilizer: Packebush, Beckett, interviews by author, 2013–16; notes from reporting at Koch Fertilizer offices, 2013; Leonard, “The New Koch.”
CHAPTER 15: SEIZING GEORGIA-PACIFIC
This time . . . dispatched to Atlanta: Hannan, Wesley Jones, interviews by author, 2016; Christopher Leonard, “An Inside Look at How Koch Industries Does Business,” Washington Post, July 1, 2017.
The team from Koch . . . Georgia-Pacific tower: Hannan, Wesley Jones, interviews by author, 2016; notes and photos from reporting at Georgia-Pacific tower, 2016; Georgia-Pacific, 10-K filing for fiscal year 2003.
When they arrived . . . a hushed cocoon of luxury: Hannan, Wesley Jones, interviews by author, 2016; notes and photos from reporting at fifty-first floor of Georgia-Pacific Tower, 2016.
Georgia-Pacific was founded in 1927 . . . lumber yard: Doug Monroe, The Maverick Spirit: Georgia-Pacific at 75 (Old Saybrook, CT: Greenwich Pub. Group, 2001); Claudia H. Deutsch, “Georgia-Pacific to Acquire Fort James,” New York Times, July 18, 2000.
Georgia-Pacific’s stock price was still struggling: Hannan, Wesley Jones, interviews by author, 2016.
After their trip to the Pink Palace . . . pulp mills: Hannan, interview by author, 2016; “Koch Cellulose and Subsidiaries Acquire Fluff, Market Pulp Business,” BusinessWire, May 10, 2004; Roxana Hegeman, “Koch Industries to Buy Georgia-Pacific’s Pulp Operations,” Associated Press, January 29, 2004.
This acquisition . . . was just a down payment: Hannan, Wesley Jones, interviews by author, 2016; Charles Koch, Good Profit, 48–50.