Probe

Despite recent earnings and regulatory setbacks focused on its energy trading operations, PG&E Corp.’s National Energy Group (NEG) has no intention of discontinuing its trading operations even with last Thursday’s announcement of cutbacks totaling $40 million annually in its merchant energy businesses. Trading is profitable and contributing to PG&E NEG’s positive cash flow, company officials indicated.

Sen. Dianne Feinstein (D-CA) has called on the Federal Energy Regulatory Commission to pay close attention to natural gas traded between November 2000 and May 2001 as it continues to investigate allegedly fraudulent and manipulative trading practices in California and other western energy markets during the critical 2000-2001 period.

The National Transportation Safety Board (NTSB) indicated last week that it was entering the final stages of its investigation into the cause of the August 2000 explosion on the El Paso Natural Gas South Mainline system that killed 12 members of two extended families in southeastern New Mexico.

Last week Baker Hughes Inc. disclosed that it is under investigation by the Securities and Exchange Commission and the Department of Justice regarding bribery-related allegations by a former regional operations manager for the company’s oil and gas drilling operations in Nigeria. Alan Ferguson, a British national who was overseeing a division of Baker Hughes’ operations in Nigeria, filed the lawsuit late last last month, claiming the company fired him for refusing to pay a bribe to a Nigerian oil official.

Prompted “in part by the Enron episode,” SEC Commissioner Isaac Hunt Jr. told Congress last week that the agency intends to begin an inquiry into whether it should regulate credit rating companies, as well as explore the need for greater competition within that industry.

FERC has agreed to allow UBS AG to sell energy, capacity and ancillary services at market-based rates, a decision that follows on the heels of UBS Warburg Energy, a U.S.-based unit of UBS, last month purchasing the North American natural gas and power trading business of Enron Corp.

Documents released last week as part of ongoing probe into Enron Corp. portrayed former Chairman Kenneth L. Lay as an absent executive who seemed to be always just returning from trips, had his eye on leaving the energy trading giant that he guided to the top, had precious little first-hand knowledge of the financial details of the company, and accepted at face value the judgments and decisions of his right-hand men.

Despite findings by the Enron board of directors’ special investigative committee that top company officials used the controversial off-the-book partnerships for self-enrichment gains, the director who headed up the three-month investigation of the collapsed energy trader refused to say Tuesday that the activities of Enron executives rose to the level of criminal securities fraud.

Rep. Bob Filner (D-CA) formally asked Attorney General John Ashcroft last week to assign a special prosecutor to investigate the scandal engulfing the bankrupt Enron Corp.