Promising continued legal actions and citing a “shocking disregard for public welfare,” California Attorney General Bill Lockyer last week filed a civil lawsuit in an East San Francisco Bay state Superior Court against Houston-based Enron Corp., alleging unfair business practices and violations of the state’s commodity law. The state court filing came three days after his office asked FERC to reconsider a refund order directed at the state last month.

The lawsuit was a move to get around Enron’s bankruptcy protections, said Lockyer, emphasizing that he hopes to have a jury trial under way in a California court before the end of this year.

While it was the 67th legal action taken by Lockyer since the state’s 2000-2001 energy crisis, the lawsuit was the first in which he singled out Enron. Lockyer also announced that his office has concluded seven settlement so far with a total value to the state of $2.42 billion. He said his office is very close to announcing other settlements, particularly separate ones with Houston-based Reliant Energy and San Diego-based Sempra Energy.

In a related matter, he said that Sen. Dianne Feinstein (D-CA) on Thursday sent a letter to the Federal Energy Regulatory Commission Chairman Patrick Wood, asking that the federal regulatory panel revoke Enron’s license for wholesale power sales/trading retroactive to before the western wholesale energy market meltdown, thus, opening the possibility of another $1-$2 billion in refunds. (FERC revoked the Enron license going forward last year.)

Lockyer cited what he called a “truly perverse regulatory outcome” last Monday in filing a request for rehearing on FERC’s refund ruling. At stake is some $270 million in potential refunds to various past energy suppliers, including bankrupt Enron. Lockyer’s filing to the federal regulators contends that the refunds would reward sellers “a second time for their market manipulation activities and predatory pricing.”

Meanwhile, Thursday’s lawsuit filed in Alameda County Superior Court was necessary because Lockyer alleges that FERC has not done its job. The lawsuit also follows a new state law (SB 434) that became effective Jan. 1 that expands the investigative and enforcement powers related to California’s securities and commodities fraud laws.

During the press conference in which he announced the lawsuit, Lockyer played excerpts from the latest tapes of a former Enron trader talking cynically to another energy power trader in the Pacific Northwest referring to California and some of the public sector energy players as being “stupid” and referencing a “Grandma Millie” who was a universal reference to the western retail power consumers.

“You heard prior discussions of what they were going to do to ‘Grandma Millie’,” Lockyer told reporters. “Well, I’m Grandma Millie’s lawyer, and I intend to pursue her interests aggressively in every possible legal setting.”

The new lawsuit alleges Enron and various named trading subsidiaries engaged in “market manipulation and various illegal practices” under California law. The attorney general called the evidence his office compiled “very compelling that California consumers should be entitled to well in excess of a billion dollars and probably closer to $2 billion in profits Enron took illegally.”

In essence, the California lawsuit relies on charges of “unfair business practices” combined with “illegal trading schemes,” Lockyer said. Basically, his office is charging Enron with withholding power supplies or causing that to happen as a means of driving up wholesale prices and pocket hundreds of millions of dollars in excess profits.

In citing FERC’s earlier action ordering California to refund $23 million to Enron for power purchases made by the state’s wholesale electricity-buying apparatus, Lockyer said it was another example of the federal agency’s “insensitivity and inactivity.” He said FERC seemed to be “in bed” with who he called the “energy generators and the energy pirates,” rather than protecting consumer interests.

“I want to get Enron and its [former] executives before a California jury, and have that jury see what these folks did, and let them make a judgment based on the record,” Lockyer said. “It would make the record clear permanently about the illegal activity that occurred and render the appropriate restitution through refunds, with punitive damages.

“If nothing else, that will help us say to potential future market manipulators, we’re going to do that with you as well. We don’t think we’re going to be swept into the bankruptcy process because of the state claims, and we think we might be able to get some of Enron’s assets before everyone else divides up the carcass.”

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