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Cantwell Releases Tapes Showing Enron Power Diversion by Mike O'Bryant Columbia Basin Bulletin - August 27, 2004

Sen. Maria Cantwell (D-Wash.) released this week recorded audio tapes of Enron traders and executives planning to ship "fish kill" power out of California and into other Southwest electricity markets during the West Coast energy crisis in 2000.

During two days in August 2000, the Bonneville Power Administration shipped Columbia River hydropower to California with the intention of helping to prevent rolling blackouts across the state. At the same time, the audio tapes revealed that Enron traders were taking a significant portion of that power after it arrived in California and diverting it to Nevada and other Southwest markets where price caps were not in place in order to get a higher market price.

Enron diverted up to one-third the amount of power BPA had sent to California Aug 3 and 4, 2000, Cantwell said. BPA was under a federal requirement to send the power to California in order to help prevent California blackouts during the state's power emergencies that summer. It sold 19,500 Megawatt-hours (MWh) to California these two days, but Enron turned around and sold 6,700 MWh out of state at the same time.

"This new evidence shows that as the Northwest was scrambling to supply California with emergency power, Enron was working just as hard to manipulate energy markets by shipping power out of California to the Southwest," Cantwell said. "How can anyone deny that the Northwest was harmed by Enron's shenanigans and that Enron knew it? It's about time that federal regulators stepped up to the plate and recognize that we paid a price and deserve some relief."

BPA shipped the power to both the California Power Exchange and the California Independent System Operator, the two regulatory bodies set up by the state to operate the California electricity market, said Ed Mosey of BPA. After the power is delivered, BPA had no control over who got the power, he added.

Cantwell and Steve Johnson, executive cirector of the Washington Public Utility Districts Association, said the scheme was the latest example of how Enron's energy market manipulation harmed Northwest ratepayers.

The transcripts (released by Cantwell) of the audio tapes have Tim Belden, Enron trader, saying: "What's going on? It's hot. It's hot and they don't have enough power. And they kill fish in northwest so that people in California can go enjoy themselves at a baseball game." Belden was the first Enron trader to plead guilty to electricity trading conspiracies.

"And then what are we doing, are we exporting some of the 'fish kill power' out of California?" asked Rick Shapiro, Enron executive:

"We are exporting some power from California to the Southwest," Belden said.

In another tape, a trader said: "You know what they're doing? They're selling the --bleeping -- fish in Oregon to the State of California for -- bleeping -- $250. Because they're shutting off the spill. They're killing -- bleeping -- thousands of fish."

One year later, during the 2001-02 drought in the Northwest, BPA was forced to spend over $350 million more than it had budgeted to buy enough power to serve Northwest customers. However, Mosey said that what happened during the 2001 drought was not related to what was happening in 2000.

"We did not interrupt spill in 2000. We did push the hydro system a little harder than we normally do in the summer by using stored water," Mosey said. While that limited the amount of water available during fall 2000, "there is nothing during that period that would say we sacrificed any fish."

2001, a severe drought year in the Northwest, was another matter, he said. "We did interrupt all spill that year." He added that the region barged all fish out of the Snake River system that year and that BPA purchased irrigation water in the upper Columbia River Basin in order to augment flows.

Cantwell along with Snohomish Public Utility District has been investigating Enron in response to Enron's $122 million lawsuit against the PUD for unilaterally voiding its power sales agreement with Enron in 2001. In June, Cantwell and the PUD released financial documents and audio tapes showing that Enron illegally obtained at least $1.1 billion in profits from Western ratepayers by manipulating energy markets 88 percent of the time between Jan. 1, 2000 and June 6, 2001. At that time, Cantwell called on the Federal Energy Regulatory Commission to investigate the charges.

BPA settled its contracts with Enron a little more than a year ago, Mosey said. He said the settlement with the Enron bankruptcy court saved Northwest ratepayers about $60 million. In addition, it unilaterally terminated some sales contracts. Mosey said that "putting those contracts behind us" at the time has proved to be prudent.

Related Sites:
Sen. Maria Cantwell: cantwell.senate.gov
BPA: www.bpa.gov
Snohomish PUD: www.snopud.com