Enron Corp. has agreed to pay the Commodity Futures Trading Commission (CFTC) $35 million to settle charges that the company and a former gas trader, Hunter S. Shively, used Enron Online (EOL), its web-based electronic trading platform, to create artificially high gas prices at the Henry Hub in Louisiana, impacting the gas futures market on the New York Mercantile Exchange.
However, before the payment can be made to the CFTC, the deal must first be approved by the Bankruptcy Court for the Southern District of New York. If the court grants Enron’s request, the parties will then submit the proposed order to the U.S. District Court for the Southern District of Texas in Houston for its approval and entry.
And if that court approves the proposed settlement, Enron will join at least 13 other energy companies and their partners or subsidiaries that have settled CFTC allegations of false price reporting, attempted manipulation, successful manipulation of the gas market or all three.
The CFTC’s complaint against Enron was filed originally on March 12, 2003 in the U.S. District Court for the Southern District of Texas, Houston Division (see Daily GPI, March 13, 2003). In it, the CFTC alleges that on July 19, 2001, Enron and Shively, manager of Enron’s central futures trading desk, used EOL to buy an extraordinarily large amount of Henry Hub natural gas next-day spot contracts in a short period of time, thereby causing artificial prices in the Henry Hub spot market and impacting the correlated Nymex natural gas futures contract.
The complaint also alleges that Enron operated EOL as an illegal futures exchange from September through December 2001 and offered an illegal agricultural futures contract on EOL. The proposed consent order would resolve all the charges in the complaint against Enron.
Since December 2002, the CFTC’s actions have led to a $300 million civil lawsuit against AEP and about 14 other settlement agreements with civil penalties totaling about $215 million, including the Enron settlement amount.
The settling parties have included El Paso Merchant Energy LP ($20 million), Dynegy Marketing and Trade ($5 million), EnCana Corp.’s former U.S.-based energy trading division WD Energy Services Inc. ($20 million), Williams Energy Marketing and Trading ($20 million), Enserco Energy Inc. ($3 million), Duke Energy Trading and Marketing ($28 million), Aquila Merchant Services ($26.5 million), Xcel Energy ($16 million), Entergy Koch Trading LP ($3 million), ONEOK and affiliates ($6 million), Calpine Energy Services ($1.5 million), Reliant Energy ($18 million) and CMS Energy ($16 million).
But like Houston-based Enron, none of the companies admitted nor denied wrongdoing in relation to the settlements.
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