Four Reliant Workers Plead Not Guilty
Four employees from Reliant Resources Inc.’s power-trading unit pleaded not guilty Friday in the first criminal case lodged against a company accused of manipulating power prices during California’s energy crisis.
Reliant Energy Services Inc., its former vice president, a former director, a manager and a trader were indicted by a federal grand jury Thursday on accusations that, among other things, they illegally manipulated prices by shutting down power plants during a two-day period.
The four employees -- charged with conspiracy, wire fraud and commodities manipulation -- are Jackie Thomas, 49, a former vice president of Reliant’s power-trading division; Reggie Howard, 37, a former director of the West power-trading division; Lisa Flowers, 37, a term trader; and Kevin Frankeny, 42, manager of Western operations. All four were released Friday on $250,000 bail each.
Their attorneys declined to comment as they left Magistrate Judge James Larson’s courtroom in San Francisco. The defendants are expected to return to court May 6.
Outside court, the company’s attorney, William Goodman, said Reliant “will not be convicted” of the same crimes the individuals are charged with.
The company and individuals are accused of shutting down four of Reliant’s five California generating stations, withholding power from the market and purchasing electricity instead of producing it to meet quotas.
The indictments, unsealed Thursday, said the company and officials disseminated false and misleading rumors to brokers about the maintenance status of power plants and the availability of power for three summer months in 2000 at the time of rolling blackouts in the state.
Artificially high spot-market power prices were the result of the “defendants’ conspiracy, scheme to defraud and manipulation,” the indictment said.
Once those prices were inflated, the indictment says, Reliant Energy Services then sold power at the higher prices, costing electricity purchasers $32 million in overpayments.
Part of the criminal indictments target the same actions over a two-day period that led to a settlement with the Federal Energy Regulatory Commission in January 2003, according to Reliant. In that deal, Reliant neither admitted nor denied wrongdoing and agreed to return $13.8 million it made by shutting down power plants over two days in June 2000.
California Atty. Gen. Bill Lockyer is also suing the Houston-based company in federal court on similar allegations.
The government said Reliant could have to pay millions in criminal fines if convicted.
