Enron is let off easy, says Cantwell

SEATTLE – In a harshly critical letter to be mailed today, U.S. Sen. Maria Cantwell, D-Wash., urged the Federal Energy Regulatory Commission to reject a $2.3 million settlement reached between the agency’s staff and the bankrupt Enron Corp. over allegations the company cheated Northwest businesses and utilities.

Not only did Enron cheat them of far more than that during the 2000-01 Western energy crisis, Cantwell said, but terms of settlement would seal much evidence of Enron’s misdeeds – making it harder for some businesses and utilities to prove that they should not have to pay Enron for broken contracts.

“I am deeply troubled by FERC staff’s willingness to abandon the Northwest stakeholders who are simply trying to avoid having to pay Enron more money – for power the bankrupt company never even delivered,” the senator wrote to the commission’s chairman, Joseph Kelliher.

Cantwell’s office released a copy of the letter Sunday.

Cantwell, who has long asserted that FERC was asleep at the wheel as Enron deliberately drove up prices during the energy crunch, also scheduled a news conference in Seattle today with some of the entities hurt most by Enron’s gaming of the market, including the Snohomish County Public Utility District, which says it was overcharged at least $20 million, and the Seattle operations of Kansas-based Ash Grove Cement Co.

FERC staff and Enron lawyers proposed the settlement last month. Nominally, it would provide $10 million to be split between several parties, most of them in the Northwest, that have yet to settle complaints against Enron, plus a $400 million penalty.

But Cantwell noted in her letter that the New York bankruptcy court judge overseeing Enron’s case is paying out just 23 cents on the dollar, and the $400 million penalty would be subordinated in the bankruptcy case – making it worth “nothing at all.”

She called the settlement proposal “woefully inadequate” and criticized a section that calls for FERC staff to “withdraw all pleadings, testimony, related exhibits, discovery requests of any type, and all additional requests for relief filed with FERC.”

The section adds that FERC staff shall oppose any motion to retain evidence as part of the record, Cantwell said, adding that she is “perplexed by the amount of information that FERC staff has to date kept under seal.”

“The ratepayers of my region, the general public and policymakers alike deserve to know the full truth about Enron’s market manipulation schemes,” she wrote.

A message left on FERC’s media line was not immediately returned Sunday. Enron does not comment on the matter.

The Houston-based Enron filed for bankruptcy protection in December 2001 as the extent of its fraudulent accounting and other misdeeds became known. Cantwell has taken a lead role in part because the public utility district for Snohomish County was suckered.

The Snohomish PUD entered into an exorbitant contract with Enron in early 2001, at the height of the energy crunch, and canceled it that fall, citing Enron’s fraudulence. Enron has sued for $122 million, the amount it would have received had the contract been fulfilled.

To defend itself, the Snohomish PUD uncovered thousands of pages of documents and had hundreds of hours of Enron audiotapes transcribed – evidence that detailed how Enron traders had deliberately manipulated the market, requiring salmon in the Northwest to be killed in the name of hydropower that was shipped to California.

Cantwell said she fears that and other evidence will be removed from the record if the settlement is approved. That would jeopardize Snohomish County’s efforts to avoid paying the $122 million, and Ash Grove Cement’s efforts to avoid paying nearly $5 million.

Last summer, Washington state settled its claims against Enron for $22.5 million – which is expected to be whittled down to about $5 million in the bankruptcy case. By contrast, California is expected to receive about $200 million on a settlement of nearly $900 million.