SEATTLE – Newly released audio tapes and financial records show that Enron Corp. (search) profited from emergency Northwest hydropower sent to California during the summer of 2000 by selling some of the energy to the Southwest.
At a news conference Wednesday, U.S. Sen. Maria Cantwell (search), D-Wash., played a tape of an Enron trader and Enron executive talking about the company's export of "fish kill power" — energy from dams that otherwise would have spilled water to save endangered salmon — out of California to Southwestern markets, where prices were higher.
The Aug. 4, 2000, conversation between Enron trader Tim Belden and Rick Shapiro, an Enron executive, began with Belden chuckling as he noted it was hot in California "and they don't have enough power. And they kill fish in the Northwest so that people in California can go enjoy themselves at a baseball game."
"And then what are we doing? Are we exporting some of the 'fish kill power' out of California?" Shapiro asked.
"We are exporting some power from California to the Southwest," said Belden, former head of trading in Enron's Portland, Ore., office.
On previously released tapes, Enron traders joked about how their market schemes were ripping off "those poor grandmothers" in California.
In October 2002, Belden became the first Enron executive to plead guilty to taking part in what federal officials have described as a conspiracy to squeeze California as state officials desperately sought power to stave off the rolling blackouts.
Financial documents made public as part of the government's criminal investigation of Enron's energy-trading practices show that Enron made $70 million in profits during 11 energy emergency days in California in August 2004, Cantwell said.
Out of 19,584 megawatt-hours the Bonneville Power Administration (search) sent to California on Aug. 3-4, 2000, records Cantwell released Wednesday show Enron sold 6,731 megawatt-hours to Southwestern markets, primarily in Nevada.
"We know for a fact that that gaming was going on during the days when Washington state was forced to sell power," Cantwell said. "We want the Federal Energy Regulatory Commission (search) to recognize how the Northwest was hurt by that and grant immediate relief."
Enron spokeswoman Jennifer Lowney declined to comment on the records, but said the company is fully cooperating with all investigations.
Cantwell accused FERC of falling short on its duty to investigate the economic blow Enron's market manipulation dealt to Northwest utilities and their customers.
"They are the policemen on the beat and the Northwest has been mugged, and they're not doing anything about it," Cantwell said.
FERC spokesman Bryan Lee countered that the commission is "doing everything it can within its limited statutory authority to address the problems that occurred in the Western energy markets in 2000 and 2001."
"It's certainly understandable, given the impacts on Western electricity customers, that folks should want us to take Enron out and hang them from the nearest tree," Lee said. "But the commission is a quasi-judicial body, and we are required by law to conduct due process, and due process takes time."
In the fiscal year after BPA shipped emergency power to California, it had to buy $400 million worth of power at a time when prices had skyrocketed. That was $350 million more in power purchases than the Portland-based power marketer had projected it would have to buy that year.
"The Northwest was sacrificing salmon to keep the lights on in California, while Enron worked as hard as it could to manipulate the markets by lying, cheating and stealing," said Steve Johnson, executive director of the Washington Public Utility Districts Association (search).
"It's as if Enron came to Florida immediately after Hurricane Charley and bought up the disaster supplies, diverted shipments of humanitarian aid sent by a neighboring state, and then turned around and sold these supplies at inflated prices."
Cantwell and the Snohomish County Public Utility District have been analyzing Enron records in response to a $122 million lawsuit filed by Enron, accusing the PUD of illegally breaking its contract with the company. The utility has claimed the contract was void because Enron engaged in fraud.
By reviewing previously released documents, the Snohomish PUD determined that Enron's manipulation of energy markets gouged Western customers for at least $1.1 billion.