FERC Admits Value of Enron Tapes, Despite Initial Resistance

FERC Admits Value of Enron Tapes, Despite Initial Resistance

Cantwell: "Federal regulators shouldn't have to be embarrassed into doing their jobs."

Staff of the Federal Energy Regulatory Commission (FERC) today changed its tune, finding "sufficient public benefit to be garnered from further review" of Enron audiotapes—despite initial efforts to exclude these tapes from evidence in its ongoing Enron proceedings. In testimony filed today, FERC staff said it "found numerous specific conversations that lead to clarification as to the intent of the [Enron] energy traders" when they entered into power deals. In addition, FERC staff cited new evidence in which Enron's own attorneys recognized the incriminating nature of the tapes as early as October 2001, writing in a memorandum that "We have already heard several conversations that should not be produced" in response to power market litigation.

"The fact this evidence almost fell through the cracks is not acceptable," said Sen. Maria Cantwell. "Federal regulators shouldn't have to be embarrassed into doing their jobs. They're supposed to be the cops on the beat, standing between consumers and the mass public mugging that took place at the hands of Enron. We need to understand why our nation's chief energy regulators resisted looking at this evidence in the first place. "

After the public release of an initial batch of Enron audiotapes last year, Cantwell and Sen. Joseph Lieberman (D-CT) wrote a July 14, 2004, letter to FERC Chairman Pat Wood, questioning the Commission's failure to consider the tapes and its attempt to exclude them from evidence. In a July 30 response to the Senators, Wood committed to Cantwell and Lieberman that he would devote an initial $800,000 in Commission resources to process the tapes. The testimony filed today provides the first glimpse of what FERC found in its review of the Enron recordings.

"FERC was actually right when it said today ‘we have only scratched the surface' given the amount of evidence against Enron. The problem is, we're almost three years removed from the initial revelation that Enron engaged in brazen and calculated strategies to manipulate Western power markets. Our nation's consumers deserve better," Cantwell added. " But now that FERC does have the evidence, the most important question is what the Commission's going to do with it. It's time for FERC to grant consumers relief from Enron's market manipulation schemes—and at least decide that Washington state ratepayers don't have to pay Enron a single penny more."

The testimony is notable in that it is also at odds with comments of FERC officials published as recently as this morning in the Washington Post , when a Commission spokesman compared the tapes to "some energy trader with a locker room mentality going over the chaos he created." Since the initial batch of Enron tapes was publicly released last spring—obtained by Washington state's Snohomish PUD from the Department of Justice—two sitting Commissioners themselves have also made comments downplaying the value of the audio evidence.

The tapes are evidence in FERC's ongoing proceeding to determine the extent of Enron's violations of Western market rules during the electricity crisis of 2000-2001, and what relief should be granted consumers who fell victim to Enron's manipulation schemes. Currently, Enron is suing utilities including Washington 's Snohomish PUD for "termination payments" associated with contracts cancelled in the midst of the energy giant's collapse into bankruptcy. Enron is suing Washington and Nevada utilities alone for almost half a billion dollars.

http://cantwell.senate.gov/news/releases/2005_03_01_ferc.html