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My five minutes with Ken Lay

By David Wagman
Managing Editor, Power Engineering

I met Ken Lay only once, and in the interest of full disclosure, it was on his dime.

Enron bought me a plane ticket and put me up in a hotel to take part in a two-day meeting in Washington, DC, in early October 2001, to talk about electricity deregulation. I was one of several journalists and several dozen assorted “thought leaders” who attended the meeting a couple of hundred yards from the terrorist-damaged Pentagon. In early October, California’s deregulation model had already hit its brick wall (with help, we would soon learn, from Enron) and Ken Lay and Co. were looking to reinvigorate the process.

I had been interested in Ken Lay, and in Enron, for a while. At the time I led a small group of analysts and writers. We pored over data looking for trends and threads of trends in the electricity industry. For a couple of years we had been amazed at quarterly data showing wholesale electric trading activity. The growth was almost exponential quarter after quarter. We could not explain what was driving the growth, but it was clear that Enron was top dog. Everyone else was snarling over scraps. My group was outside the fence looking in.

So when the invitation to travel to Washington came in the late summer of 2001 I saw it as a chance to spend a little time more closely observing the big dogs responsible for driving change in the electricity industry. I wanted to see them in action and begin to understand them firsthand. I wanted to meet Ken Lay.

The conference was run by Intellibridge, a firm founded in 1999 by David Rothkopf, a former Clinton-era undersecretary of commerce. Also present was former National Security Advisor Anthony Lake, Rothkopf’s business partner. James Schlesinger, former head of the CIA and Secretary of Energy, attended. So did Pat Wood, at the time chairman of the FERC. He and other FERC commissioners shuttled in and out of the room to steer clear of open meeting rules that come into effect whenever FERC commissioners are at the same place at the same time. More than a few academics and state public utility commissioners also attended.

Rothkopf led the meeting. Lay attended throughout. At a lunchtime Q&A session featuring Lay and a writer for the Economist magazine, Rothkopf joked that the meeting already was having positive effects because Enron’s stock (which lately had been in a slump) was rebounding in that day’s trading. Ken Lay, sitting on a platform above the luncheon crowd, laughed with the rest of us. Enron was a couple of weeks away from collapse.

In the meeting’s final hour, Rothkopf asked the group to think ahead a year and suggest what the top deregulation news headlines might read in October 2002. Many people spoke. I did not. I can’t recall if Lay added his ideas to the mix. But it struck me at the time that after all I had heard, seen and read about deregulation, its failures and the growing backlash that there could be no more bad headlines about deregulation. There could be no more California debacles if deregulation was to go forward. I shared that thought with my readers a few days later. It seemed a mild and somehow obvious caution when a few weeks later, in November 2001, Enron’s collapse dominated headlines.

The meeting adjourned, I shook Ken Lay’s hand, thanked him for inviting me and left. Five years later, he was convicted of fraud and conspiracy on May 25. On July 5, he died.