Monday, June 21, 2004

The Little PUD That Could 

The heartwarming story of how various federal agencies (including FERC and the Ashcroft DoJ) played hot potato with the inciminating Enron tapes, until a dinky outfit called the Snohomish County (WA) Public Utility District got sick of being bilked and decided that it might be in the customers' interest to pony up $100 grand for transcripts:
"We just happened to turn over the right rock that had this amazing trove of evidence that was not only legally explosive, but something that ordinary people could listen to and say, 'Wow, these guys are really crooked bastards,'" said Snohomish lawyer Eric Christensen . . . .

In January 2001, [Snohomish entered] into a nine-year contract with Enron to buy power at $109 per megawatt hour, more than four times as much as the utility had been accustomed to paying for such contracts.

That fall, as evidence of Enron's extensive misdeeds surfaced and its stock price evaporated, Snohomish canceled the contract, saying it was voided by Enron's fraudulent practices.

In 2002, as part of its bankruptcy proceedings, Enron sued, arguing it was entitled to the profits it would have made had the contract been fulfilled: $122 million.

Nevada Power found itself in a similar, though slightly more ironic, situation. Enron canceled its contract with Nevada Power and its sister company, Sierra Pacific Power Co. of Reno, citing a drop in the company's credit rating. Then it demanded the $336 million it would have made had the contract been fulfilled.

As absurd as the claims seemed to officials in Nevada and Washington state, a federal bankruptcy court judge in New York last fall ordered them to pay -- a decision that is being appealed . . . .

Snohomish [obtained] -- over FERC's objections -- tapes of 2,800 hours of conversations involving Enron traders. FERC spokesman Bryan Lee says his agency opposed the request for the tapes to protect criminal investigations of Enron by the FBI and Justice Department.

FERC officials said Thursday they would review the tapes. Before that announcement, Sen. Maria Cantwell, D-Wash., was incensed that they hadn't taken any action.

"For a little PUD (public utility district) to spend $100,000 transcribing tapes that FERC and other people should have done, it's just crazy," Cantwell said.

Spokesman Bryan Lee says FERC didn't examine it because "it wasn't our material. . . . It was the Justice Department that seized it from Enron."

The Justice Department hasn't reviewed the tapes yet because it would be too expensive, Assistant U.S. Attorney Matthew Jacobs of San Francisco wrote in a declaration to FERC. Other authorities passed for similar reasons . . . .

As for the expense, Christensen -- a former FERC staffer -- says it's worth it. If Enron is allowed to collect $122 million from Snohomish, it is expected to cost each Snohomish ratepayer $420 on average -- on top of the $1,000 extra they've paid over the past 3 1/2 years due to market manipulation.

Enron representatives have refused to comment, except to say that the company is cooperating with all the investigations. Sens. Barbara Boxer and Dianne Feinstein of California want their state to receive at least $8.9 billion in refunds, and Snohomish and Nevada Power are seeking in the 9th U.S. Circuit Court of Appeals an order that long-term contracts made under manipulated prices be renegotiated.

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