OLYMPIA -- The failure of federal energy regulators to act may preclude Northwest ratepayers from ever getting financial relief for fraud committed by Enron traders, Washington Attorney General Christine Gregoire warned today.
In a letter to the Federal Energy Regulatory Commission (FERC), Gregoire said Enron has proposed a bankruptcy plan that would eliminate the rights of utilities and ratepayers to obtain rate relief from FERC as a result of illegal acts that artificially inflated electricity prices and caused billions of dollars in economic harm to the Northwest.
“With Enron’s submission of a plan of reorganization to the bankruptcy court, the door is closing on any meaningful relief from Enron for these fraudulent activities,” Gregoire warned FERC.
Any future commission orders for rate relief “will be worth no more than the paper they are printed on, and that will provide scant comfort to the parties looking to FERC for real relief from real harm,” she said.
Enron is accused of manipulating wholesale electricity markets during the 2000-2001 West Coast energy crisis.
“The recent disclosure of tapes and trading transactions has confirmed beyond any doubt that Enron was not only involved in fraudulent and deceptive practices in the electricity markets, but that it created many of them and was actively developing new ways to defraud customers,” Gregoire said.
Despite evidence of fraud, Gregoire said FERC has, “refused to void outrageous contracts, take back illegal profits through disgorgement, or provide any real opportunity for remedies on behalf of customers.”
She reminded FERC that the state has made repeated appearances before the commission on behalf of Northwest utilities seeking rate relief. “I am extremely disappointed that three years have passed without FERC providing any meaningful relief to Washington’s utility customers who were harmed by Enron’s egregious and blatant activities,” Gregoire wrote.
Electricity rates for many Washington consumers rose as a result of the 2000-2001 crisis, as utilities were forced to buy at excessive prices to serve their customers.
Now, she said, FERC is on the verge of being too late to provide relief – if it chooses to do so. She urged FERC to use the evidence of fraud to provide rate relief to western consumers and to take action in bankruptcy court to protect its regulatory authority.
“Enron must not be allowed to complete the bankruptcy without real accountability for its outrageous actions,” she told the commission.
On behalf of ratepayers, Gregoire has filed a claim against Enron in bankruptcy court. Her attorneys recently filed an objection to Enron’s proposed Findings of Fact and Conclusions of Law, which would have the effect of protecting the company from any rate relief ordered by FERC. In addition, Washington has filed a Freedom of Information Act request for Enron records at FERC. Disclosure of the records will be essential in prosecution of the state claims, Gregoire said.
The state also has conducted antitrust investigations based on allegations of price manipulation. There have been two settlements so far from those investigations. Williams Energy Marketing and Trading Co. agreed to pay $15 million and El Paso Corp. will pay $21.3 million.