Top Government Energy Regulator Met With Enron Executives Last Fall

WASHINGTON – The government's top energy regulator met with senior Enron executives last fall and received a phone call from Enron's chairman, continuing a series of contacts that began when he was head of Texas' public utility commission, documents disclose.

Pat Wood, appointed by President Bush to head the Federal Energy Regulatory Commission in August, told a lawmaker Thursday that he first met then-Enron chairman Kenneth Lay in May 1996 at a meeting of the Governor's Business Council in Texas.

Between March 1997 and January 2001, Wood said, he had contacts with Lay, former Enron chief executive Jeffrey Skilling and Enron chief of staff Steve Kean — who came to Wood's office at the utility commission in January 1998.

In a related move, leaders of the House Energy and Commerce Committee, who have challenged the veracity of Skilling's recent testimony to Congress, wrote Skilling on Thursday asking him to clarify statements he made.

Their letter notes, for example, that Skilling testified on Feb. 7 that when he resigned in August, he believed Enron was in strong financial condition and its financial reports accurately reflected its condition. Skilling also stated that he could not recall being involved in approving questionable transactions related to one of Enron's partnerships that were used to hide more than $1 billion in debt and eventually brought the company down.

Documents obtained by the House committee contradict Skillings' sworn testimony, the panel's chairman, Rep. Billy Tauzin, R-La., and the other lawmakers told him.

The documents show, for example, that Lay told company investigators last month that Skilling knew the details of many of the partnership transactions.

Before his resignation, "Skilling was taking Enron's stock decline personally and could not sleep at night," Lay is quoted as telling the investigators, appearing to contradict Skillings' assertion that he believed the company was in good shape.

"Chairman Tauzin remains convinced that Mr. Skilling was not candid in his statements before Congress," said Ken Johnson, a spokesman for Tauzin. "Testifying under oath is sacred and anyone who violates that trust will be held accountable. We intend to aggressively pursue this until we get the truth."

Wood, who as Texas utility commissioner at the time, said he phoned Lay in March 1997 seeking Enron's support for a utility restructuring bill and in January 2001 to express concern about the company's shift in policy regarding a Texas market issue.

Last November, when Enron was spiraling toward collapse, Lay called Wood, who was then the FERC chairman. An e-mail of the phone message appears to indicate that Lay was calling to inform Wood of a proposed merger between Enron and rival energy company Dynegy, designed to rescue Enron, according to a document Wood provided the lawmaker. Wood said he didn't return the call.

During that time, Lay was calling several Bush administration officials, including the treasury and commerce secretaries, seeking help as Enron foundered.

Wood has been an advocate of market-oriented regulation of utilities, a position espoused by Houston-based Enron, which was a big, aggressive energy trader that had become a favorite of Wall Street. The company collapsed into the biggest bankruptcy in U.S. history on Dec. 2.

Lay, a friend of Bush and major contributor to his campaigns, gave the White House recommendations last spring for appointment to the FERC. Among the eight or so names were Wood and Nora Brownell, whom Bush named as a member of the energy commission.

After Wood became the FERC chairman, Kean came to his office in Washington on Sept. 20 with two other Enron officials and representatives of other companies to discuss pipeline industry preparations following the Sept. 11 terror attacks. In October, Wood sat at a table with Lay at an Enron-sponsored conference on U.S. energy policy at which Wood spoke.

Wood provided documents containing the information to Rep. Joe Barton, R-Texas, chairman of a House energy subcommittee. It was requested on Feb. 13 by Rep. Henry Waxman, D-Calif., a member of the panel.

Wood said last week, in a letter to Sen. Barbara Boxer, D-Calif., that "I do not think the Enron Corp. ... has had any undue influence on the decision-making process" at the FERC.

"I sincerely believe that the agency's decisions have not been compromised or otherwise improperly shaped by any communication with Enron executives."