CBS News Correspondent Vince Gonzales reports California paid Perot Systems, whose founder and chairman of the the board is former presidential candidate and Texas billionaire Ross Perot, millions of dollars to help design its new deregulated energy market. But documents given to a state senate committee show the company and its consultants then turned around and told power companies how to beat the system it helped create.
Perot declined a request for an interview, but in a statement he says his employees "did not improperly reveal, disclose or use any confidential information." On Thursday, Perot will appear before a state senate committee to answer questions about his company's role in California's energy crisis.
Mike Florio, a member of the board that runs the state's power grid, says California was betrayed.
"We thought these were our people," says Florio. "They were gleeful to take advantage of what they had learned, and that is very troubling to me."
According to company e-mails, Perot employees decided to peddle their knowledge, saying, "It should be fun and profitable." Behind the state's back, they made presentations and sent letters to major energy companies. Enron was told, "Many holes in the system exist that could be used to deliver 'unexpected' profits."
Companies were shown several different ways to push up prices. For example, companies were told they could "have a 'sudden' outage of a big plant," so other plants could "make more money."
That's exactly what whistleblowers claim happened.
Enron got caught using a scheme to clog transmission lines that Perot Systems had pitched. Enron admitted no wrongdoing but paid $25,000.
State Sen. Joe Dunn says energy companies used almost every trick in Perot's power playbook.
"We thought Enron was the brainchild of many of those strategies, but what it turns out to be is Enron was simply Perot Systems' best student," Dunn says.
Dunn compares Perot Systems to a crooked home security company. "They went out and marketed the flaws in that security system to the burglars that were out there that ultimately committed the California heist."