Glendale Finds No Impropriety in Its Enron Deal

An internal investigation has determined that power traders for Glendale’s municipal utility did not knowingly participate in improper electricity trading ploys with Enron Corp., an attorney for the city said Friday.

Officials disclosed May 31 that Glendale Water and Power had a profit-sharing agreement with Enron, in which the now-bankrupt energy company marketed the city’s surplus power.

State and federal investigators are examining whether Glendale and other utilities were involved in schemes by Enron to create the appearance of shortages to boost prices during California’s energy crisis in 2000 and 2001.

The city’s investigation, however, has concluded that Glendale Water and Power had no improper involvement in the Enron trading ploys, said Richard Marmaro, an outside attorney hired by the city.

“What we have determined is that the city of Glendale did nothing improper in these transactions,” said Marmaro, a partner with law firm Proskauer Rose who represents Glendale. “Power traders for the city of Glendale did not knowingly participate in improper electricity trading ploys.”

Marmaro said the city had given its findings to the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market. The city also plans to give the information to the Federal Energy Regulatory Commission and Commodity Futures Trading Commission, he said.

State Sen. Bill Morrow (R-Oceanside) said the Senate panel had not fully reviewed Glendale’s findings and might seek testimony from utility officials. He said there were still questions about Glendale’s relationship with Enron.

“We’re just not going to take [the city’s findings] at its face value,” said Morrow, who is vice chairman of the committee.

Glendale Water and Power generates power and provides electric and water service to more than 78,000 customers. It had a profit-sharing agreement with Enron from June 1999 to June 2000, in which Enron sold Glendale’s excess electricity and split profits, earning the city $3.9 million.

The utility also has been in a power marketing alliance with Houston-based Coral Energy since August 2000, to make bids and schedule energy with the California Independent System Operator on behalf of Glendale.

Marmaro said there had been no improprieties in that arrangement.

“We don’t believe we did anything wrong in our dealings with Coral Energy as well,” Marmaro said.

Morrow’s committee is investigating power transactions by about a dozen California utilities, but has not reached any conclusions.