Citing newly released documents issued by FERC, Sen. Dianne Feinstein (D-CA) on Wednesday called on U.S. Attorney General John Ashcroft to investigate fraud and antitrust violations that may have occurred during the 2000-2001 western energy crisis.

FERC on Wednesday evening released a huge batch of evidence it has collected as part of its probe of alleged manipulation of western energy markets on the same day that it rolled out an exhaustive report detailing its staff’s findings as a result of that investigation (see Power Market Today, March 27).

“Now that the Federal Energy Regulatory Commission has lifted its ‘protective order’ and has allowed the public to review evidence of market manipulation in the western energy market, I am writing to ask the Department of Justice to fully investigate and prosecute possible violations of antitrust and fraud statutes by energy companies,” Feinstein wrote.

California has filed “thousands of pages of new evidence at FERC that further demonstrate how these incidents of fraud and manipulation were not isolated events attributable to a few rogue energy traders,” Feinstein said. “Instead, the documents provide substantial evidence that energy companies engaged in well established and coordinated strategies to deliberately withhold electric power and natural gas at critical moments during the western energy crisis in a concerted effort to boost company profits.”

The senator said that the filing at FERC “shows that there was a coordinated attempt by energy companies to manipulate the western market and to drive prices up” by engaging in several “schemes” including withholding of power, bidding to exercise market power, scheduling of bogus load and export-import games, among others.

She also said that the filing reveals that the largest suppliers in California shared information from a company called Industrial Information Resources that provided sellers detailed, non-public information on daily plant outages.

“I strongly believe the Department of Justice must investigate possible antitrust violations by energy companies as detailed by the California parties in their brief,” Feinstein said. “Allowing competitors to share non-public information on plant outages through Industrial Information Resources that traders called ‘the mole’ seems to be an antitrust violation on its face.

“As the California parties state, ‘even in the absence of a price fixing agreement, the exchange of price or output information can itself violate the Sherman Act as an unreasonable restraint of trade, if it causes anticompetitive effects.’ How can it be lawful for traders to obtain information from their competitors through an intermediary like Industrial Information Resources?”

Feinstein also urged the Justice Department to “vigorously investigate” what she said was new evidence of intentional document destruction cited in the filing at FERC.

During a 100-day discovery process at FERC, “an ex-Mirant employee disclosed that he was instructed to delete certain files relating to the California markets from hard drives and that key Mirant executives were instructed to turn in their laptops so that Mirant could clear their hard drives,” Feinstein told Ashcroft.

“Similarly, a City of Glendale employee told an ex-Glendale employee that he could destroy one of the documents that contained information about Enron’s gaming strategies.”

Feinstein asked the Department of Justice “to use its investigative and subpoena powers to conduct a thorough review of the market abuse by energy generators, suppliers, and traders in the western energy market. The mountain of evidence submitted to FERC requires a complete and thorough investigation to ensure families and businesses see an end to fraud and manipulation in our energy markets.”

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