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Enron's Real Obscenity is Continuing Cost of 'Crisis' by Joel Connelly Seattle Post-Intelligencer, June 9, 2004

Beneath a sky gray with foreboding, Bellingham Mayor Mark Asmundson pointed out a window at industries along his city's working waterfront facing temporary, partial or permanent shutdown.

"What is happening now, we will still be feeling years from now," he told the Cascadia Mayors Conference as it met in the midst of the 2001 energy crisis. Asmundson wondered if the electricity shortage and soaring power prices had been "artificially created."

How right he was. The smoking gun just took three years to uncover.

It came in obscenity-spattered conversations taped in 2000-2001 as Enron traders manipulated West Coast energy markets.

The Snohomish County Public Utility District -- in a singular act of public service -- transcribed and released the recorded record of corporate greed last week.

Old rip-offs often do not make new news. As Asmundson predicted, however, utility customers are still paying for Enron's manipulation. A lot of manufacturing jobs went out the window.

"My constituents, in repeated analyses by California, Washington and Oregon economists, have probably lost 100,000 jobs directly and indirectly from the energy crisis," Sen. Maria Cantwell, D-Wash., said on the Senate floor last week.

The Enron boys in Houston were fiddling as the West Coast burned kilowatts at inflated prices.

One Enron trader chuckled about shipping power from California to Nevada in order to avoid the Golden State's price caps.

"I'm takin' mine to the desert," he said.

In another call, the Enron boys tell El Paso Electric Co. to take a generator off line for awhile. The generator, in Texas, could have supplied California. Enron had a contract to oversee El Paso's wholesale generating operations.

"There's not much, ah, demand for power at all and we're running kind of fat," says one Enron voice.

"Oh yeah," replies another voice.

"Well, why don't you just go ahead and shut her down, then, if that's OK," says the first voice.

The conversation took place on Dec. 4, 2000, just as the West Coast's energy crisis was going critical.

When a wildfire shut down a major transmission line, decreasing power supplies and raising energy prices, there was celebration in Houston.

"The magical word of the day is, 'Burn, baby, burn!' That's a beautiful thing," sings out the voice from Enron.

Price caps, imposed in the Clinton administration's waning days, were the bane of Enron traders.

"So the rumor's true?" one trader asks. "They're (obscenity) takin' all the money back from you guys? All the money you guys stole from those poor grandmothers in California?"

"Yeah, Grandma Millie, man," answers another. "But she's the one who couldn't figure out how to (obscenity) vote on the butterfly ballot."

The dark face of energy deregulation continued to display itself.

"Yeah," jokes the first trader. "Now she wants her (obscenity) money back for all the power you've charged right up her (obscenity) for (obscenity) $350 a megawatt hour."

The conversations came during a period in which control of the federal government changed hands. The boys at Enron couldn't wait to see Clinton leave, along with his secretary of energy.

"That (bleepin') Bill Richardson," said one energy trader.

"He's (bleepin') gone!" exulted another.

The traders rejoiced at the role their parent company and its chairman, Ken Lay -- "Kenny Boy" as he was nicknamed by George W. Bush -- played in backing the eventual winner of the 2000 campaign.

"You know who the biggest contributor is to Bush?" said one trader. The voice on the other end of the line wonders if anybody gave more money, or loaned out the corporate jet more often, than the big "E."

"Ken Lay is going to be secretary of energy," the first voice jokes.

"That would be awesome," says the voice on the other end of the line.

The months before its implosion in the fall of 2001 marked a high water mark of Enron's political clout.

Ken Lay was part of the Department of Energy transition team. At the White House, "Kenny Boy" was given a private meeting with Vice President Dick Cheney to lay out Enron's input into the Bush administration energy plan. Lay sent the White House five names as possible appointees to the Federal Energy Regulatory Commission. Two were named to the commission.

Out on the "Left Coast," energy rates went crazy. Electricity that was trading at $20-$30 a megawatt hour increased to the $350-$400 range. Supplies mysteriously disappeared.

The lawyering goes on three years later. The regulatory commission has irrefutable evidence that power rates were manipulated. Under federal law it has statutory authority to assure power rates that are "just and reasonable."

Still, the commission has refused to revoke exorbitant power sales contracts of the sort that were forced on the Snohomish PUD and other utilities during the energy crisis.

In an act of corporate gall, Enron is suing a number of utilities in the West, asking for more than $500 million. It is asking $122 million from the Snohomish PUD, claiming the utility illegally severed a 2001 power contract.

Cantwell plans to ask FERC Chairman Pat Wood why his agency and the Department of Justice have not released audio tapes of Enron traders in their possession for the past two years. The tapes obtained by Snohomish PUD are only a portion of the recorded cursing and conspiring.

"The key thing is relief for the ratepayers, and we end up fighting the agency that is supposed to give us relief," Cantwell said yesterday.

"The Department of Justice has these tapes. They've sat on them. A trial judge at FERC tried to suppress the Snohomish PUD when it requested the tapes. When Snohomish County finally got the tapes, it had to spend $100,000 to transcribe them."

Wood is one of the commissioners originally recommended for his job by none other than Ken Lay.

California Attorney General Bill Lockyer announced last week that he will separately sue Enron. In one of the tapes' quotes, an Enron trader identifies a colleague who "steals from California."

All these legal actions, in turn, are tied into Enron's bankruptcy proceedings.

What a mess, a mess that hit us up and costs us still. Sen. Dianne Feinstein, D-Calif., put it well: "Absent strong action, I have no doubt that this unethical, immoral and illegal behavior will continue."

Does Congress' pending energy bill provide such action? No way.

Related Sites: Enron Tapes Anger Lawmakers CBS News, 6/2/4