Energy traders with the once-powerful Enron Corp. were robbing California “to the tune of a million bucks or two a day” during the state’s energy crisis in 2000-2001, and these activities may have been reported to the company’s top leaders, former Chairman Kenneth Lay and ex-CFO Jeffrey Skilling, according to documents filed last Monday.

The Snohomish County Public Utility District (PUD), a municipal power provider located near Seattle, WA, filed at FERC 450 to 500 pages of transcripts of telephone conversations from Enron electricity traders in Portland, OR, which was the center of the company’s West Coast operations. The utility claims the transcripts provide “definitive evidence” that Enron intentionally congested power transmission lines and delayed FERC-approved wholesale price caps to inflate profits in western energy markets, and they suggest that Skilling and Lay may have been privy to the actions.

The Snohomish County PUD received copies of the taped conversations in February and March following a negotiated agreement with the Department of Justice, which had seized them during its investigation of the Houston-based energy company. The taped exchanges cover only about six to eight weeks of trading activity in the western markets, and “barely scratch the surface” of traders’ dubious practices, said Snohomish PUD Assistant General Counsel Eric Christensen last week.

One of the most telling conversations was between Susan Mara, who at the time headed up Enron’s California government affairs office, and the company’s manager of the California trading desk, Christensen noted. She asked the manager, who was identified simply as “Bob,” for “some estimates from you on how much value we’ve brought to ENA [Enron North America], and on specific things, for example delaying going to the $250 price cap until August first.”

Mara said she needed the information because “this is the time of year when government affairs has to prove how valuable it is to Ken Lay and Jeff Skilling.” This recorded exchange provides a “strong implication that there was regular reporting between Houston [corporate offices] and Portland” about traders’ activities on the West Coast, Christensen told NGI.

But Mara, now an energy consultant, told the Los Angeles Times that she didn’t remember what her final presentation contained or whether Skilling and/or Lay had heard it.

Skilling faces 40 criminal charges for his role in the Enron scandal, but he has not been accused of complicity in the company’s questionable trading practices in California. No charges have been brought against Lay at this point.

Further along in the conversation, Mara asked Bob: “Do you know when you started over-scheduling load and making buckets of money on that?” Bob responded, “I don’t know when exactly we started doin’ it.” But later he added, “It’s been a while though.”

Mara: “I was wondering when, ’cause I mention[ed] it to Tim [believed to be Tim Belden] as something he should do and I just don’t know if he was already doing it.” She quickly added, “I gave him the idea [laughs].”

Belden, former chief energy trader in Enron’s West Power Trading Division in Portland, pleaded guilty last October to conspiracy to commit wire fraud for his role in the California energy market crisis. He faced a maximum of five years in prison, but has agreed to cooperate with federal prosecutors in their ongoing investigation.

In filing the documents, Snohomish County PUD has asked the Federal Energy Regulatory Commission to re-consider the issue of refunds for over-charges to Pacific Northwest electricity customers. In addition, the utility wants FERC to revoke Enron’s market-based rate authority effective when the market manipulation allegedly began (1998), which would in effect strip the company of any profits that it made from West Coast energy markets since that time. FERC last year revoked Enron’s market-based rate authority effective 2003, but Christensen said that action provided no relief whatsoever to ratepayers.

“This latest evidence provides the impetus for FERC to finally bring meaningful rate relief to the West Coast electric consumers who were the primary victims of Enron’s fraudulent schemes,” he noted.

In a separate transcript, Belden gave someone known only as “Person 2” a progress update on Enron trading activities in California, and he mentioned Jeffrey Richter, who formerly supervised Enron’s West Power Trading Division for the California spot power market.

Belden: “He [Richter] steals money from California to the tune of about a million.”

Person 2: “Will you re-phrase that?”

Belden: Ok, he…arbitrages the California market to the tune of a million bucks or two a day.”

Richter pleaded guilty in February to conspiracy to commit wire fraud and to making false statements to federal investigators to cover up his involvement in Enron’s questionable practices in the western energy markets.

John M. Forney, a third former Enron trading executive who was charged with wire fraud and conspiracy for his alleged role in the manipulation of the California energy markets, was not cited in the transcripts. Forney was reputed to be the architect of some of the more famous energy trading schemes that were used in California — “Ricochet,” “Death Star,” “Black Widow,” “Red Congo” and “Get Shorty.”

Another transcript revealed Enron energy traders bragging about how much money they stole from “Grandma Millie,” apparently a reference to unsuspecting energy customers on the West Coast.

Person 1: “…all the money you guys stole from those poor grandmothers of California?”

Person 2: “Yeah, Grandma Millie, man. But she’s the one who couldn’t figure out how to…vote on the butterfly ballot.”

©Copyright 2004 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.