Sens. Joe Lieberman (D-CT) and Maria Cantwell (D-WA) last Wednesday asked FERC Chairman Patrick Wood to reopen FERC’s investigation into Enron’s trading practices during the 2000-2001 Western energy crisis and to explain how the agency will respond to new evidence of “extensive and deliberate” trading manipulations, particularly in the context of disputed energy cost refunds and long term energy contracts to which Enron was a party.

The two lawmakers also called for Senate hearings to examine the thoroughness of the Federal Energy Regulatory Commission’s investigation of Enron’s abusive energy trading practices.

In separate letters to Senate Governmental Affairs Committee Chairman Susan Collins (R-ME) and Wood, Lieberman and Cantwell said FERC’s ” failure” to review thousands of hours of audio recordings that provide evidence of the abusive tactics used by Enron traders to inflate electricity prices during the 2000-2001 Western energy crisis cast doubts on the results of the FERC investigation, concluded in March 2003.

“This new evidence of abusive practices raises significant questions about the thoroughness of FERC’s own investigation into the trading practices of Enron and other market participants during this period,” the senators wrote to Wood.

The evidence, Lieberman and Cantwell said, also raises questions about “FERC’s actions with regard to the many related issues which arose as a result of market problems, such as the refund of unjust and unreasonable prices, the validity of long term contracts entered into by Enron and other market participants, and enforcement actions against market participants who engaged in abusive practices.”

The Snohomish County, WA, Public Utility District discovered the existence of the tapes, which have been in the custody of the Department of Justice.

Lieberman and Cantwell assert that FERC agreed only to review the nine hours of recordings specifically submitted by Snohomish, “but has thus far ignored the other 2,800 hours of tape obtained by Snohomish, and the thousands upon thousands of additional hours of recordings that remain in the custody of the Justice Department.”

Wood last month directed staff attorneys to immediately review the explosive new audiotapes and other documents related to Enron’s activities during the 2000-2001 energy crisis, as well as all Enron proceedings pending before the Commission, to determine what further steps the agency may need to take in pending cases (see NGI, June 21).

In 2002, as part of its investigation into the Enron debacle, a majority staff report of the Governmental Affairs Committee found a “shocking lack of regulatory vigilance” by FERC, the two lawmakers said. It also concluded that “over and over again, FERC displayed a striking lack of thoroughness and determination with respect to key aspects of Enron’s activities — an approach seemingly embedded in it regulatory philosophy, regulations, and practices.”

Lieberman and Cantwell said in their letter to Collins that hearings on FERC’s response to the taped evidence would be an appropriate follow-up.

“If the Commission and the FERC staff continue to take such a narrow view of the issues that may be raised and the significance of the continuing stream of evidence about Enron’s abusive market practices, any review of current proceedings may well be merely perfunctory,” the senators wrote to Wood. “The additional evidence of market abuses uncovered by Snohomish, and likely contained in the remaining Enron recordings, warrant a thorough reassessment of the Western market proceedings and the relevance of Enron’s abusive practices to those markets.”

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