Calling Enron Corp. a “sad chapter in energy history,” FERC Chairman Pat Wood on Thursday 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.

“As our 2002-2003 staff investigation showed, the corporate culture at Enron ‘fostered a disregard for the American energy consumer.’ These taped conversations indicate that this corrosive attitude seeped down from the corporate offices to the employees at the front line,” he said. Reporters quizzed Wood about why the Commission didn’t know of the existence of these audiotapes when it was conducting its investigation.

Responding to what critics see as the agency’s lax enforcement of regulations against Enron misbehavior, FERC commissioners said the Commission did its best with the limited criminal and civil penalty authority that Congress and the courts have given it.

The attacks on the Federal Energy Regulatory Commission have reached a fevered pitch in the wake of the release of explosive audiotapes and reams of documents that purportedly reveal Enron and its traders illegally obtained at least $1.1 billion in profits from West Coast customers during the 2000-2001 energy crisis, and boasted to each other about how much they stole (see Daily GPI, June 15).

Defending FERC, Commissioner Joseph Kelliher said, “We have no ability to impose a civil penalty for most violations of the Federal Power Act, and our criminal penalty authority is limited to a daily amount of $500.” He noted that Rep. Joe Barton (R-TX), now chairman of the House Energy and Commerce Committee, and President Bush have both proposed tougher enforcement power for FERC, but the agency still is waiting for Congress to do something.

“If Congress does give the Commission the enforcement authority it needs and the Commission fails to act, [then] it’s fair to criticize the Commission” for not being tough on violators. But until then, “we have to soldier on with grossly inadequate enforcement authority.”

Echoing that sentiment, Commissioner Suedeen Kelly said “there’s in our statute no ability to levy a penalty for this kind of behavior.” She noted she is “more and more distressed that our statutory enforcement is so little” over violators in the energy industry.

“I think it’s our duty to look into those tapes,” Kelly said. They show the “cold-blooded greed,” how “cruel traders were,” and the “callousness of employees to the suffering” of West Coast energy consumers. Perhaps even worse, the tapes reveal that this behavior was “encouraged” and “rewarded” by higher-ups at the once high-flying Enron.

Sen. Maria Cantwell (D-CA), a long-time critic of FERC, and Snohomish County Public Utility District (PUD), a municipal utility located near Seattle, WA, on Monday released audiotapes and a slew of documents, which they claim show Enron illegally profited by at least $1.1 billion from western energy consumers. Cantwell and Snohomish PUD contend that the new evidence supports the request for refunds for West Coast customers.

In late May, Snohomish PUD on its own released additional audiotapes and documents detailing the activities of Enron traders on the West Coast. One of the released transcripts 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.

At a press briefing following the Commission’s meeting, Wood was quizzed on what substantive actions FERC could now take against Enron in the wake of the new tapes — especially in light of the fact that FERC has already stripped the former energy trading giant of its market-based rate authority.

Wood noted there is a pending case at FERC related to the possible manipulation of western power markets in 2000-2001 through the use of partnerships, alliances or other arrangements [EL03-180-000, et al.]. The agency is looking at whether Enron affiliates engaged in such strategies with various electric utilities.

Curtis Wagner, FERC’s chief administrative law judge, recently agreed to extend the deadline for the issuance of an initial decision in the proceeding to early December 2004.

Meanwhile, Kelly said that “the really damning part” of the tapes is the background information. “It wasn’t the conversation between El Paso [Electric] and Enron — it was everything that was in the background and you could hear what the traders were saying. That’s just the really bad stuff.”

Another reporter questioned whether the fact that FERC just got its hands on this new information sends a signal to the power industry that FERC doesn’t get all of the information it should be getting from the Department of Justice (DOJ) that utilities believe should be part of the record. Snohomish procured the tapes from the DOJ.

“I do think, to be fair, the Gelinas report was our first attempt at what I would call an investigation,” Wood responded. FERC, in March of last year, issued a report written primarily by then-FERC staff member Don Gelinas that concluded the wholesale natural gas and electricity markets in California and other western states were significantly manipulated during the critical 2000 and 2001 period.

“Did it cover 100% of what was out there?” Wood asked rhetorically in reference to the Gelinas report. “No. Did it cover a lot? Yes. And again, I would urge you to reread that report — it was a sad day in energy history to actually have to go through it — but I think the FERC found quite a bit, including some of the claims that people are acting like are brand new today. I think we saw a corrupt culture at work with the smoking gun memos and with the follow-up to that that Gelinas and his team found in 2002, 2003,” Wood said. “But can we do better? Sure.”

“I think…that it’s fair to say that one of the lessons learned is that we do want 100% of the information,” Kelly added. “I think that what we didn’t know was how pervasive a culture it was and that’s what these tapes show — that it was just so pervasive and encouraged,” she said at a later point of the press briefing.

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