On June 14, 2004, U.S. Senator Maria Cantwell and the PUD held a press conference about Enron. Here is her press release:
Snohomish PUD releases new financial documents showing Enron illegally obtained at least $1.1 billion in profits
Senator Cantwell calls on Federal Energy Regulatory Commission to open new investigation of Enron and provide ratepayer relief
WASHINGTON, DC – U.S. Senator Maria Cantwell (D-WA) and Washington State’s Snohomish County Public Utility District (Snohomish PUD) today released new financial documents and audiotapes that show Enron illegally obtained at least $1.1 billion in profits from western ratepayers.
Cantwell also called on the Federal Energy Regulatory Commission (FERC) to open a new investigation and take effective action against Enron in a letter to FERC Chairman Pat Wood. “Unfortunately, FERC has fallen down on the job by conducting an inadequate investigation of Enron’s market manipulation,” Cantwell said. “You have to ask yourself, what has FERC been doing with all this evidence of illegal activity? Certainly not protecting Grandma Millie.”
The new evidence released today shows that the market manipulation discussed in the Enron audiotapes actually happened. The evidence includes:
- Previously unreleased financial documents, including over 750 pages of “inc” sheets and reconciliation statements, dating from 1/1/00 to 6/20/01, that show Enron manipulated energy markets on 88% of the 537 days during that period. As a result, Enron illegally obtained at least $1.1 billion in profits from western ratepayers using conservative estimates.
- Audiotapes of Enron employees discussing how to congest power lines to drive up electricity prices in California and discussing a ricochet transaction in which they obscured the true source of power from a western utility. In one tape, one Enron employee tells another: “If the line’s not congested then I just look to congest it.” The employee later says “If you can congest it, that’s a money-maker no matter what.” In another an Enron employee says “So technically, Western will see it, but it’s bouncing out – just in and out of their system…a ricochet.”
- Accounting data illustrating in detail how Enron executed its trading schemes. For example, in one example of a “ricochet,” on the first day of Stage II power alerts in California, Enron illegally obtained $222,678 in a three hour period by purchasing power from a California ISO, shipping it to Oregon where its original source was masked, and then reselling to the California ISO for $750 per megawatt hour.
- Documents showing that Enron employed at least five additional trading schemes named “sidewinder,” “ping pong,” “donkey punch,” “spread play” and “Russian roulette.”
- Documents showing that Enron maintained five separate sets of accounting records.
The new evidence was discovered by Snohomish PUD, which is defending itself from a $122 million lawsuit by Enron for canceling a 2001 contract. Incredibly, when Snohomish PUD sought the now-infamous Enron audio tapes from the Department of Justice to prepare its defense, FERC staff filed a motion to quash Snohomish PUD’s subpoena.
“We now have over 9 hours of audiotape and tens of thousands of pages of financial documents covering 18 months in our possession that FERC not only failed to uncover in its investigation, but attempted to quash in ours,” Cantwell said. “FERC's pattern of inaction and obstruction raises two troubling questions: why didn't FERC want you to see this evidence and whose side is FERC really on?”
Snohomish PUD believes it was justified in terminating its contract with Enron because the contract was based on manipulated energy prices and because Enron was not creditworthy. If Enron wins its lawsuit, the average cost to each Snohomish PUD customer would be $420. Enron has sued several other western utilities for more than $500 million based on similar claims.
“I’m not going to allow Enron to treat western ratepayers as their deep pockets,” Cantwell said. “We don't owe Enron, Enron owes us.”
FERC has the authority – and responsibility – to void “unjust and unreasonable” contracts like those signed by western utilities with Enron, putting an end to Enron's efforts to bilk consumers of even more money. If FERC were to void these contracts, Enron would no longer have a case against Snohomish PUD and other western utilities. FERC has repeatedly refused to take action and void the Enron contracts.
Cantwell sits on the Senate Energy and Natural Resources Committee which has oversight over FERC. Cantwell introduced legislation after the 2001 energy crisis to ensure transparency in energy markets and is the author of the ENRON Act which would ban energy market manipulation by companies like Enron.
Senator Cantwell is a resident of Snohomish County and is a Snohomish PUD ratepayer. Since market manipulation forced Snohomish PUD to raise rates in January 2001, Cantwell’s own electricity bills have increased by approximately $800. Cantwell’s electricity usage is about 20% lower than the average Snohomish PUD ratepayer.