Documents Reveal Enron’s Clout on Energy Agenda

In its highflying days, Enron Corp. sought to guide the new Bush administration toward a sweeping energy agenda, ranging from creating a national electricity grid to opposing protection of domestic steel products, according to documents made public Tuesday by congressional investigators.

Memos released during an oversight hearing by the Senate Governmental Affairs Committee show that in 2001 Enron lobbied the White House for the appointment of two top energy regulators and fretted that the Bush administration was losing the energy policy battle to Democratic critics.

“The Democrats so far seem to be winning the political high ground,” said an Enron briefing paper for Kenneth L. Lay, the company’s chairman, in advance of an April 17, 2001, meeting with Vice President Dick Cheney. “What the Bush team needs to do is steal a page from the Clinton new economy playbook and to relegate the Democrats to the Carter ‘eat your peas’ playbook.”

The White House must link the Democrats to “blackouts, waste, Luddites, regulation, government ownership, stagnation” while positioning Bush as the agent of “abundan[ce], efficiency, new economy, innovation, open markets,” the document said.

Democrats said the documents showed how Enron wielded its clout -- by, among other things, backing specific nominees to the Federal Energy Regulatory Commission and meeting with high administration officials on energy policy -- before collapsing into bankruptcy protection in December in a wave of accounting scandals. Republicans pointed out that Enron also enjoyed access to high-level appointees in Bill Clinton’s administration.

The documents provide a glimpse at the behind-the-scenes maneuvering on major policy debates.

Lay, now a pariah in business and political circles, was then on a first-name basis with powerful administration figures.

“Congratulations on the speed with which you, Dick and others have been able to place high-quality individuals in every cabinet post,” he faxed Bush transition team director Clay Johnson on Jan. 8, 2001, after Bush’s cabinet picks had been announced. The “Dick” referred to was Cheney, and Lay signed his note “Ken.”

Enron’s efforts, however, did not always lead to the desired results.

Its two candidates for the Federal Energy Regulatory Commission -- Patrick H. Wood III and Nora Brownell -- were approved, despite some strong competition. But in the summer of 2001, Wood and Brownell voted for energy price limits in the West, a policy opposed by Enron. Wood is now FERC chairman.

While limits on soaring prices in the West took up much public debate during 2001, the documents show that Enron focused on an insider’s issue: the creation of a national electricity transmission grid. It coined an egalitarian term for the issue: “open access.”

A national grid would have radically shifted the fortunes of some of the biggest players in the electricity industry. Old-fashioned utility companies that still control much of the regional transmission infrastructure would have seen their influence diminish, while the new breed of energy marketers epitomized by Enron would have seen their ascendancy confirmed.

To Enron’s chagrin, administration officials were treading cautiously.

“For the purposes of this meeting, we strongly recommend that most of the discussion center on our core concern: open access,” Enron’s Washington lobbyists wrote Lay before his meeting with Cheney.

The company also retained Ed Gillespie, a top GOP political and policy consultant, to lobby the White House.

“It is not clear that [administration officials] are fully committed to our open access issues,” Enron lobbyist Linda Robertson wrote Lay. “Their lack of zeal for open access, while totally unacceptable, is understandable given that the West Coast power crisis has presented the administration with difficult and unique political issues.”

In the end, Bush’s energy plan did endorse the concept of a national grid but left it to FERC and Congress to work out the details.

FERC, an independent agency that functions like a national utilities commission, has since unveiled a proposal for such a grid. But it has been sharply criticized by elected officials, state regulators and utilities in the West and the South, and it appears far from becoming official policy.

The documents show that in the spring of 2001, Enron’s lobbyists correctly forecast that the administration would eventually accept price limits on electricity in the West.

White House energy advisor Andrew Lundquist “stated he is getting pressure from both Democrat and Republican members of Congress about price caps in the West,” Enron’s Washington lobbyists reported to Lay. This was interpreted as “a warning that price caps might be inevitable.”

Although opposed to price caps, Enron believed that a more visible role for federal regulators might calm public concerns and allow for more far-reaching changes in the industry.

“More aggressive action by the FERC on both market power issues and pricing issues would give the administration enormous political cover and would allow them to redefine the debate,” the Enron lobbyists wrote.

White House officials have said that though they consulted with Enron, the company received no special favors.