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Enron Spawned Trouble for Fish

by Jonathan Peterson, Times Staff Writer
Los Angeles Times, August 26, 2004

Dead Northwest salmon were yet another result
of the energy company's market manipulation, new evidence indicates.

To the long list of Enron Corp.'s victims, add Northwest salmon.

A fresh round of evidence released Wednesday suggested that Enron traders shipped emergency power out of California, even as hydroelectric dams in the Pacific Northwest - struggling to ease the energy crisis - were running full tilt.

That's where the salmon, an icon of the Northwest, come in. Water that normally would have eased them away from massive hydropower turbines instead was used to make electricity, further endangering the already endangered fish.

More broadly, said Sen. Maria Cantwell (D-Wash.), transcripts released Wednesday portrayed a regional strategy in which the Houston energy company exploited efforts to prevent an economic calamity in California during the market meltdown of 2000-01.

"This new evidence shows that as the Northwest was scrambling to supply California with emergency power, Enron was working just as hard to manipulate energy markets by shipping power out of California to the Southwest," said Cantwell, releasing excerpts of routinely recorded trader conversations.

In one exchange, then-Enron trader Timothy N. Belden seemed to lay out the strategy for Rick Shapiro, at the time an Enron lobbyist.

"It's hot and they don't have enough power. And they kill fish in Northwest so that people in California can go enjoy themselves at a baseball game," Belden said during an Aug. 4, 2000, conversation.

Shapiro then asked: "And then what are we doing, are we exporting some of the 'fish kill power' out of California?"

Answered Belden: "We are exporting some power from California to the Southwest."

Belden's attorney, Cristina Arguedas, maintained Wednesday that such excerpts were "inherently" out of context. "To take just a few sentences out of a lot of tapes and a longer conversation is not something I would want to comment on," she said.

Belden pleaded guilty in 2002 to a charge of wire-fraud conspiracy for rigging California's electricity markets and is cooperating with investigators. He has not been sentenced.

Jennifer Lowney, an Enron spokeswoman, declined to comment on Cantwell's remarks, saying only: "We're continuing to cooperate with all investigations."

Although the exchange between Belden and Shapiro took place in August 2000, it wasn't until the following year that salmon deaths related to the energy crisis became a major public concern as drought conditions intensified in the Northwest. The Bonneville Power Administration was sending as much water as possible to its hydropower turbines, impeding the ability of salmon to migrate and sucking a great many to their deaths.

At the time of the Enron trader remarks, "you could assume there was some additional mortality as a result of running the system hard," Ed Mosey, chief spokesman for the Portland, Ore.-based agency, said Wednesday.

The evidence Cantwell unveiled Wednesday came from a cache of tapes and documents obtained this year by a Seattle-area utility district that is in a legal battle with Enron. Those tapes include previously released conversations in which Enron employees bragged about exploiting "Grandma Millie" and other California energy consumers.

Financial documents show that on Aug. 3-4, 2000, at least a third of the amount of emergency power that the Bonneville Power Administration sent to California as part of a federal directive to ease the crisis was purchased by Enron and resold to out-of-state buyers, Cantwell said.

The strategy was one of several Enron schemes, many with colorful nicknames, used on those days, she said. Other "gaming" tactics included Death Star, in which traders would pretend to move energy to relieve congestion, and Load Shift, which exaggerated the amount of congestion in the grid.

A spokesman for the Federal Energy Regulatory Commission said that regulators were aware of Enron's practices in the West and noted that an administrative trial on those charges may begin next month. In July, the commission ordered Enron to return $32.5 million in profit from improper trading schemes and told an administrative law judge that the company might be required to return more than five years of trading profit.

"The commission has ruled that there was nothing illegal about selling power from one state to the next," FERC spokesman Bryan Lee said. "Were there terrible consequences during the energy crisis? Yes. That's why it's important to get the rules right so we don't need to learn from these sorts of terrible mistakes."

Jonathan Peterson, Times Staff Writer
Enron Spawned Trouble for Fish
Los Angeles Times, August 26, 2004

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