In what can only be described as the result of an embarrassing lack of oversight, a grand jury in Williamson County indicted six people yesterday for allegedly being involved in a strikingly simple scam of the state’s electricity grid operator, the Electric Reliability Council of Texas (“ERCOT”).
The five former top managers and one contractor at ERCOT billed the organization $2 million for work by shell security and computer-contracting companies that the individuals controlled, even though much of the work was not performed. The activities were first detailed last summer in a series of articles by The Dallas Morning News, which prompted questions around the state about whether anyone involved with ERCOT had ever heard of the concept of “financial controls.”
All of the indicted individuals joined ERCOT as it grew rapidly in response to the introduction of electric competition in Texas in 2002. ERCOT’s mission is to maintain the reliability of the Texas electricity grid and coordinate key pieces of the state’s $20 billion deregulated electricity market. The nonprofit organization’s $127 million annual budget is generated through mandatory fees paid by electricity customers or their power providers.
A state district judge appointed Texas Attorney General Greg Abbott in November, 2004 as special counsel in the case after the findings of an internal ERCOT investigation were disclosed to the Williamson County district attorney. At the same time, the judge impaneled the special grand jury in Williamson County, where ERCOT has its primary control center. ERCOT’s headquarters are in Austin.
In announcing the indictments yesterday, Mr. Abbott said that the case is “far from over” and that additional indictments may be coming down the pike. Indictments make for good publicity, but I’m more interested in the identities of the people in ERCOT management, on the ERCOT Board, and at the Texas Public Utility Commission (ERCOT’s regulator) who were asleep at the switch and missed such a simple scam. Funny how those names tend to get lost in the shuffle of indictments.