Goldman Sachs and Bank of America have made hundreds of millions of dollars from the recent electricity crisis and blackouts in the state of Texas. Similar scandal was created by Enron 20 years ago. Enron had made billions out of the electricity crisis in California.
Last month, the Texas electric grid failed due to the polar vortex blast. This resulted in unexpected fluctuations in electricity prices. Bank of America made profits of hundreds of thousands by “highlighting the upside for Wall Street from mayhem that knocked out power and heat across the state, industry executives and traders said.”
The electricity contracts, which were owned by the bank’s energy triaging group based in Houston, had risen owing to the rise in Texas power prices in the third week of February. Texas power prices got as high as 10,000% to a cap of 9,000 USD per megawatt-hour.
Blocked supply of natural gas and frozen coal pipes resulted in widespread blackouts that lasted for days.
BofA is an active participant in the Texas Energy Market. BofA used to trade power and gas and make the generators capable of handling the fluctuating prices. As a result, BofA turned into a repository of power contracts whose value surged during the blackouts.