Energy Giant Conspired to Control Marketby Mark Martin
San Francisco Chronicle, July 23, 2004
Regulators order Enron to forfeit $32 million
Sacramento -- Federal energy regulators ordered Enron on Thursday to give back more than $32 million in "unjust'' power profits in a ruling that could lead to much broader findings that the disgraced energy giant unfairly gamed West Coast electricity markets for six years.
Concluding that Enron secretly conspired with another Texas electricity company, the Federal Energy Regulatory Commission ruled that Enron broke market rules by hiding its business relationship with a supposed competitor. The commission also ordered an administrative law judge to review all of Enron's dealings in the West between 1997 and 2003 to determine if the company should be forced to refund all of its profit during the period, which includes the California energy crisis.
The order is symbolically significant, as it will lead to more scrutiny of Enron's entire electricity business during a lengthy period when the company scored huge profits at the expense of consumers in California and throughout the West.
But Enron is just emerging from bankruptcy and has a long line of creditors. It seems unlikely that state consumers would ever get a big refund from the company.
"We're not going to break out the party hats and pop champagne corks,'' said Tom Dresslar, a spokesman for California Attorney General Bill Lockyer. Lockyer has led an as-yet-unsuccessful attempt to win back $9 billion from power companies stemming from the state's crisis in 2000 and 2001.
On Thursday, regulators ruled that Enron violated federal market law by working with El Paso Electric Co. without reporting the arrangement.
"In short, Enron at times had control over the quantity, availability and pricing of wholesale power sales by a competitor,'' the commission wrote in an order that will require Enron to deposit $32.5 million into a U.S. Treasury Department account.
The order directed that the funds be returned to consumers in the Western states, but it was unclear Thursday how the money would be divvied up.
The commission went on to note that Enron had other relationships with other competitors and ordered Administrative Law Judge Isaac Benkin to conduct a comprehensive review of all of Enron's business in the West between Jan. 1, 1997, and June 25, 2003.
"Enron potentially could be required to disgorge profits for all of its wholesale power sales in the Western Interconnect,'' according to the commission.
That could range between $125 million and $2.97 billion, the commission noted in its order.
Other California officials described the ruling Thursday as too little, too late.
"It's really nice to see FERC leaping into action three years after California's ratepayers were taken to the cleaners,'' said state Sen. Debra Bowen, D-Marina del Rey (Los Angeles County), chairwoman of the Senate's lead energy committee.
"Where was FERC in 2000, 2001 and 2002, when its refusal to enforce the Federal Power Act and blow the whistle on these guys let Enron and other power companies siphon $9 billion out of California?"
learn more on topics covered in the film
see the video
read the script
learn the songs