Senator Says Evidence Contradicts Enron Execs
New evidence shows Enron Corp. was still manipulating energy markets a year after the company claims it stopped, a senator said Thursday, asking that lawmakers haul the company back to Capitol Hill to explain the discrepancy.
Internal documents and audiotapes revealed that Enron continued manipulative trading practices almost until its bankruptcy filing in December 2001, although executives told Congress in sworn testimony that those kinds of strategies stopped in December 2000, said Sen. Maria Cantwell (D-Wash.).
Cantwell lives in a county where the local utility is battling Enron in court.
She asked the Senate Commerce and the Senate Energy and Natural Resources committees to hold hearings on the new evidence, obtained through legal and regulatory proceedings.
“We now have evidence that Enron continued to manipulate the markets, beyond when they notified traders internally that this was illegal and should stop,” she told reporters. “Why is there this discrepancy?”
Last week, California Atty. Gen. Bill Lockyer sued Enron after reviewing audiotapes in which energy traders bragged of exploiting “Grandma Millie” and other Californians.
Lockyer suggested that the tone of the recorded conversations might influence a jury in setting damages, which he said could amount to more than $1 billion.
California officials also have demanded a refund of $8.9 billion for alleged overcharges from various energy companies during the meltdown of the state’s electricity markets. Officials at the Federal Energy Regulatory Commission have signaled that their figure is closer to $3 billion.
Cantwell said that the new evidence showed Enron kept at least five different sets of books and that it provided a “snapshot” of the company’s unfair profit from energy manipulation schemes, which she said was conservatively estimated at $1.1 billion.
Regulators at FERC are “sitting on their hands,” she said, so Congress should investigate. Last week, FERC agreed to review the new evidence to see whether it could affect its existing cases against Enron.
A Senate Energy Committee spokeswoman said Enron hearings already had been held in both chambers, and “this ground has been thoroughly plowed by all branches of government.”
Enron spokeswoman Karen Denne said the company was “continuing to cooperate fully with all investigations.” She declined to comment further.
Enron lawyers testified under oath to a Senate Commerce subcommittee in May 2002 that in December 2000 the company had put a stop to deceptive trading practices dubbed “Ricochet,” “Get Shorty” and other nicknames, which involved shifting around power between states.
But internal “reconciliation sheets” kept by Enron show the manipulation continued for 191 days in 2001, Cantwell said. She released copies of one such sheet from Dec. 2, 2001, on which someone had scrawled “variances due to load shift.” The documents were obtained through the discovery process in FERC proceedings, she said.
Cantwell also played an audiotape in which two Enron employees discussed how much profit they might make off a deal with the public utility in Snohomish County, north of Seattle, where Cantwell lives.
“I think this is about a $10-million deal,” one voice says on the tape. “Profit? Oh!” the other voice says.
Snohomish’s utility obtained the tapes from the Justice Department, which seized them as part of a criminal probe.
The evidence is important to ratepayers throughout the West, where Enron is suing several utilities to collect on broken contracts, Cantwell said. If Enron wins its $122-million suit against Snohomish County’s utility, the average ratepayer there will be forced to pay $420, she said.
“I think it’s ridiculous that they expect to get paid,” she said.
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Reuters was used in compiling this report.
