Letters Show Lay Urged Bush Support on Deregulation

Former Enron Corp. Chairman Kenneth Lay urged George W. Bush in repeated letters throughout his governorship to support restructuring the state's electric market, according to documents released Friday.

In a Nov. 16, 1998, letter to Bush, Lay asked for continued support for electric deregulation, which would benefit the now-fallen energy giant.

"By passing such a bill, your administration would be responsible for providing the citizens of Texas with the equivalent of a tax cut which could immediately amount to $1.7 billion or more annually," Lay wrote. "Please have your team let me know what Enron can do to be helpful in not only passing electricity restructuring legislation but also in pursuing the rest of your legislative agenda."

In his two Texas gubernatorial campaigns, Bush received $312,000 from Enron officials, including Lay, who was one of his biggest donors.

Bush received more than $100,000 from Enron officials for his presidential campaign. Lay was one of the Bush "pioneers" who raised at least $100,000 for his presidential run.

Although Bush signed a law deregulating the electricity market in 1999, the documents do not appear to show that Bush responded in print to Lay's interest in the issue.

In other correspondence, Lay asked Bush to push for stricter tort reform laws. Bush had made clear during his first gubernatorial campaign that tort reform would be a top priority. He signed a sweeping bill into law in 1995.

The two also exchanged friendly birthday, holiday and get-well wishes. Much of the correspondence came from Lay, while a few letters originated from Bush's desk.

State archivists released the correspondence following requests by news organizations and others under the Texas Public Information Act. The 350 pages cover Bush's governorship from January 1995 until he resigned in December 2000 to become president.

In many of the letters, Lay asked Bush to appear at events or attend meetings, including one with the prime minister of Romania. Other documents include schedules and minutes from the Governor's Business Council, which Lay chaired, proclamations from Bush and reports from Enron officials.

In an April 3, 1997, letter, Lay wrote Bush about Enron's negotiations for a $2 billion joint venture with Neftegas of Uzbekistan and Gazprom of Russia to develop Uzbekistan's natural gas and transport it to markets in Europe, Kazakhstan and Turkey. According to the note, Bush was scheduled to meet with Uzbekistan's ambassador to the United States just a few days later.

"This project can bring significant economic opportunities to Texas, as well as Uzbekistan," Lay wrote.

Many of the documents however, dealt with electric deregulation. Before its collapse, Enron had been one of the most vocal proponents of deregulation across the country. Electric deregulation got under way in Texas on Jan. 1 of this year.

In an Oct. 17, 1997, letter, Lay thanked Bush for calling then-Pennsylvania Gov. Tom Ridge.

"I am certain that will have a positive impact on the way he and others in Pennsylvania view our proposal to provide cheaper electricity to consumers in Philadelphia as well as make it possible for open and fair competition at a much earlier date," Lay wrote.

Regarding deregulation in Texas, Lay wrote to Bush about competition in Texas' wholesale power market as early as a month after Bush took office. In a Feb. 15, 1995, letter, Lay outlined his position that restricting important competitors from the wholesale power market harms the economy by causing higher electric prices.

In another letter in July 1996, Lay wrote that every day in which electric deregulation was delayed meant money lost to the nation's economy and a diminished ability for Texas to compete in a global market.

"The existing system discourages innovation, forbids most competition and tolerates inefficiency by insulating producers against the market pressures that work to hold down costs," he wrote.

In separate letters in 1996, Lay and former Enron chief executive Jeffrey Skilling told Bush that Enron officials could arrange for him to tour Enron's trading floor in Houston.

"We would like to show you how we do business," Skilling wrote.

Earlier this month, Gov. Rick Perry's office released correspondence between Enron executives and the governor's office in response to an open records request. The correspondence covered both Bush's and Perry's administrations.

Those documents showed that as governor Bush appointed at least two officials recommended to him by Lay: Pat Wood to the Public Utility Commission and Frank Maresh as chairman of the State Board of Public Accountancy.

Wood, a backer of utility deregulation, since has been named by Bush, after Lay's urging, to the Federal Energy Regulatory Commission. Wood is chairman of FERC.

Since Enron's collapse last fall, Bush has publicly distanced himself from Lay. But some of the letters released Friday illustrate a friendly relationship.

In December 1999, Lay wrote Bush and his wife, Laura, to thank them for a "Tejano Santa" print by artist Sam Coronado that the couple signed.

Bush sent Lay a letter in April 1997 wishing him a happy birthday: "55 years old. Wow! That is really old. Thank goodness you have such a young, beautiful wife."