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Latest Tapes Reveal Enron Workers Chortling Over Killing Salmon by Dan Richman Seattle Post-Intelligencer, August 26, 2004

Enron Corp. traders joked about killing Northwest salmon as dams here churned out power meant to ease California's 2000 power crisis but which actually was resold by Enron -- at a high profit -- to the nation's Southwest, records show.

Financial data and transcripts of recorded phone conversations released yesterday by U.S. Sen. Maria Cantwell, D-Wash., furnished additional evidence of pricing schemes by the bankrupt energy trading company that she said have done major damage to the Northwest.

And the Federal Energy Regulatory Commission, which is charged with regulating the nation's power supply, has done little to mitigate that impact, Cantwell charged yesterday at a news conference in Seattle.

The Aug. 4, 2000, conversation between Enron trader Tim Belden and Rick Shapiro, an Enron executive, began with Belden chuckling as he noted that it was hot in California, "and they don't have enough power. And they kill fish in the Northwest so that people in California can go enjoy themselves at a baseball game."

Shapiro responded, "And then what are we doing? Are we exporting some of the 'fish-kill power' out of California?"

"We are exporting some power from California to the Southwest," said Belden, former head of trading in Enron's Portland office.

Cantwell said the Bonneville Power Administration, which markets electricity at cost from 31 federally owned dams in the Northwest, got orders from the Energy Department in August 2000, mid-December 2000 and January 2001 to provide more than $200 million worth of power to California, which was suffering critical electricity shortages.

The salmon were killed when the BPA put 100 percent of the flowing water through the turbines, in order to generate extra power from the flow. Normally, some portion of the flow is passed through spillways to provide a safe route for the fish.

Cantwell couldn't clarify how long the bypasses lasted on Aug. 3 and Aug. 4, 2000. But the Seattle Post-Intelligencer at that time quoted a BPA spokesman as saying that for every four to six hours salmon went through the turbines, 2 percent of the young among them would be killed.

Financial documents made public as part of the government's criminal investigation of Enron's energy-trading practices show that Enron made $70 million in profits during 11 energy emergency days in California in August 2000, Cantwell said.

The BPA sent nearly 20,000 megawatt-hours to California on Aug. 3 and Aug. 4, 2000, according to records Cantwell released yesterday, while Enron sold 6,731 megawatt-hours to Southwestern markets, primarily in Nevada.

The traders' conversation is one of many contained on two audio CDs released by Cantwell yesterday. Staff members from the Snohomish County Public Utility District and Cantwell's office have spent hundreds of hours transcribing the conversations, the senator said.

In October 2002, Belden became the first Enron executive to plead guilty to taking part in what federal officials have described as a conspiracy to squeeze California as state officials there desperately sought power to stave off rolling blackouts.

Enron filed for bankruptcy in 2001 amid devastating revelations of hidden debt, inflated profits and shady accounting.

Enron spokeswoman Jennifer Lowney declined yesterday to comment on the records, but she said the company is fully cooperating with all investigations.

Cantwell has been warring against federal energy regulators and Enron since June. She and Steve Johnson, executive director of the Washington Public Utility Districts Association, said the Northwest has been hit hard by Enron's scheming:

• The BPA is still owed $57 million for power that was sold into California in 2000 and early 2001.

• Enron sued the Snohomish PUD in mid-2002 for $122 million, saying the agency acted illegally when, in November 2001, it prematurely ended a contract with Enron to buy power. The PUD says that contract is voidable because of Enron's fraudulent practices.

• Snohomish County businesses have shut down because of high electricity rates there, and other businesses have declined to locate there.

• The high rates in Washington have slowed the economy and caused the state to suffer one of the nation's highest unemployment rates. By reviewing previously released documents, the Snohomish PUD determined that Enron's manipulation of energy markets gouged Western customers for at least $1.1 billion during the power crisis.

• After selling the emergency power to California, the BPA had to buy $400 million worth of power, at an average of $104 per megawatt, to serve its own customers. That expenditure required rate increases, averaging 48 percent, by Washington's 23 PUDs, which are not-for-profit organizations that serve 1.5 million residents.

Despite these dramatic results of Enron's misdeeds, the Federal Energy Regulatory Commission has done little to intercede, Cantwell alleged.

"They're the policemen on the beat, the Northwest has been mugged, and they're not doing a thing about it," she said.

FERC spokesman Bryan Lee responded, "Given the magnitude of events in 2000 and 2001, it's perfectly understandable Senator Cantwell would want the commission to take Enron out and string it up from the highest tree. But we have an adjudicatory function, which requires giving all parties due process."

He said that in July, the commission directed Enron to forfeit $32.5 million in profits, and that all Enron profits earned from January 1997 through mid-2003 are being examined in a FERC administrative proceeding.