Enron Corp. - University of California | Office of The President

evenue. Even though Enron could not determine what the LPG price would be so many years out,
Enron moved the curve up $20 million on the deal because Enron needed to get its revenue numbers
up for the end of 00. When one trader refused to move the curve up because there was no valid
justification to do so, the trader was told to mind his own business and the curve was moved up by
a superior. The trader left Enron because of this manipulation. This was not an isolated incident as,
in fact, curve manipulations occurred in every quarter in all of Enron's WEOS operation.
(f) The financial performance and the value of contracts entered into by EES were
grossly overstated through various techniques, including the misuse and abuse of mark-to-market
accounting to create huge current-period values for Enron on what were, in fact, highly speculative
and indeterminate outcomes of long-term contracts. This resulted in EES improperly and
prematurely recognizing hundreds of millions of dollars of revenue that not only boosted its financial
results, but allowed top EES managers and executives to collect huge bonuses based on these
improperly inflated contract valuations.
(g) EES was, in fact, losing hundreds of millions of dollars on many of its retail
energy contracts. To induce customers to enter into these agreements – so that Enron could claim
its EES business was growing and succeeding – Enron had, in effect, "purchased" their participation
by promising them unrealistic savings, charging low prices Enron knew would likely result in a loss,
and spending millions of dollars in the short term to purchase purportedly more energy-efficient
equipment, a significant portion of which costs Enron knew it was likely never to recover and
certainly never to make a profit on. Enron executives knew that Enron would lose money on the
EES deals, but had to make them more and more attractive to generate new clients, while the
Company utilized unrealistic projections and mark-to-market accounting to mislead investors into
believing that the EES contracts were making money. For instance:
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