EVERETT – A “Gone fishin’” paddle hangs on the wall. An “I love Dad” mug waits for its next tea bag. Towering stacks of paper litter the floor, the desk and a nearby table.
Dan Bates / The Herald
Amid the clutter, an 81/2-by-11-inch piece of paper taped to a bookshelf can easily be missed. It’s an award recognizing Eric Christensen for taking on a giant.
His office is the front line in Snohomish County PUD’s shootout with Enron Corp.
The PUD’s gunslinger is Christensen, 42, a country boy from Nampa, Idaho, who dug up the troves of incriminating evidence against Enron that are now helping states across the West fight the bankrupt energy trader.
The work that Christensen has been doing since Enron sent the PUD a bill for $117 million in early 2003 has been so overwhelming and so all- encompassing that he maintains a constant state of multitasking. While he talks, he simultaneously answers e-mails, takes frantic phone calls and dispatches documents to colleagues working on the case.
“I’ve always worked hard, but this has been over the top,” said Christensen, who came to the PUD in 1997 to escape the long hours and intense demands of big-city lawyering. “Sometimes the fates have a way of tricking you.”
The PUD’s fight with what once was one of the world’s largest corporations began when Enron decided that the PUD would be a good source of cash to pay its bankruptcy creditors, PUD leaders said.
Enron sued the PUD in early 2003, claiming that the utility owed it $117 million plus interest (now more than $122 million) for canceling an electricity contract to power 10,000 homes for eight years. Enron also sued utilities in Nevada and California on similar grounds.
Snohomish County PUD canceled the contract just days before Enron filed for bankruptcy in 2002 to avoid getting tangled up in the proceedings.
After Enron filed suit, PUD leaders were outraged and suspicious, seeing so many indications that Enron had illegally manipulated prices when it sold electricity to utilities during the 2000-01 West Coast energy crisis. The PUD decided the fight was on.
Those record electricity price run-ups sent the PUD’s rates soaring about 50 percent in 2001, to among the highest in the state. PUD customers still struggle to pay those rates today.
Soon after entering the fray, the PUD gained national fame by uncovering the details of how it had been company policy at Enron to employ scams to drive up the price of the electricity during the energy crisis.
Enron officials declined to comment for this story, other than to say they are cooperating with all ongoing investigations.
* n n
In the trenches, Christensen led the fight to obtain 24,000 hours of taped Enron trader phone conversations. The tapes were obtained after a public information request was filed with the Federal Energy Regulatory Commission and the U.S. Department of Justice. Christensen led the effort to transcribe and read through the conversations.
“Eric has done a magnificent job of demonstrating perseverance in the face of tyrannical fraud,” said Rep. Jay Inslee, D-Wash. “His work has helped thousands of people who don’t even know his name yet, but they should. He has just been a bulldog on this.”
PUD General Manager Ed Hansen has been at the helm of the PUD’s standoff with Enron, shepherding a fight that he says everyone at the PUD supports, from Christensen to the elected commission to the utility’s 295,000 customers.
“We didn’t pick the fight with Enron,” Hansen said. “Enron picked the fight with Snohomish. My view is we made the right decision” in going after them. “There’s $122 million involved.”
* n n
Christensen began his career wanting to uncover the mysteries of life, not fraud.
He studied biology at the University of Kansas, switched tracks and earned his law degree at Stanford University in 1987. Like many graduates of prestigious law schools, he spent several years working for a large Washington, D.C., law firm. That’s where he was introduced to the regulatory field and began doing work on railroads, natural gas pipelines and the environment.
An ironic twist in Christensen’s career occurred when he landed at FERC, the federal agency charged with regulating energy companies, including Enron.
From FERC, Christensen came to Snohomish County PUD – his chance to escape the hustle and bustle of big-city legal work.
Washington, D.C., came with him, however, as he quickly got caught up in the high-stakes game of purchasing electricity during the energy crisis.
Along with two other high-priced contracts with other providers, the PUD in January 2001 bought 25 megawatts of electricity from Enron in a contract with a 2009 end date. Twenty-five megawatts can power about 10,000 homes.
Enron charged a previously unheard of $109 per megawatt hour. A similar contract signed today would cost from $35 to $45 per megawatt hour, and electricity prices are considered high right now.
“Needless to say, that’s an outrageous price to pay for that length of contract,” Christensen said.
* n n
Clues began to emerge that Enron was coming apart not long after the PUD signed the contract.
First, Enron rejiggered its profits by deleting a cool $1.6 billion from the company’s profit column. Then Enron sent the PUD a letter demanding that the utility send it $100 million if it wanted to “lock in its contract.”
With the smell of bankruptcy in the air, “we terminated the contract on Nov. 28,” Christensen said. “On Dec. 2, they filed for bankruptcy.”
When Enron decided to sue the PUD, the utility knew it had to have the taped Enron trader conversations. Those tapes revealed a gold mine of evidence.
The enormity of what the PUD found hit Christensen as he was reading through one particular telephone transcript. The words were from a top Enron official who was bragging about all the scams his group of traders had successfully deployed.
“The first time I read it, I thought, ‘They couldn’t have said that on tape,’” Christensen said. “I didn’t realize just how amazingly arrogant and unguarded these guys would be on recorded calls.”
Mike Gianunzio, the PUD’s general counsel and Christensen’s boss, knew the PUD had hit pay dirt when he read a transcript of two traders talking about how they planned to lie to the PUD to drive up the price of the electricity they later sold to the utility.
In the exchange, the first broker says: “Make it sound like we’re in a competitive process.”
“OK,” says the other.
“(Ask) who have other (utilities) been talking to, or some (expletive) like that,” the first broker continues.
The second broker laughs.
First broker again: “It’s all how well you can weave these lies together.”
The other broker responds: “I feel like I’m being corrupted now.”
“No, this is marketing,” is the response. “It’s not as bad as trading.”
“OK, cool, I’ll do it,” the second broker says.
Gianunzio’s response: “I feel like that’s a smoking gun.”
* n n
The PUD released its first volley of taped phone transcripts last May. That bombshell gave birth to the now-famous image of “Grandma Millie” getting ripped off, and it drew the national spotlight to Snohomish County:
“So the rumor’s true?” one trader asks another. “They’re (expletive) takin’ all the money back from you guys? All the money you guys stole from those poor grandmothers in California?”
“Yeah, Grandma Millie, man,” the second trader replies. “But she’s the one who couldn’t figure out how to (expletive) vote on the butterfly ballot.”
Grandma Millie quickly captured the hearts of frustrated utility customers across the West, many of whom wrote heartfelt letters of thanks to Christensen.
When the Grandma Millie transcript came across his desk, Christensen remembered wondering, “What are they thinking, saying this on a recorded line?”
* n n
Christensen said he knew Enron had engaged in numerous scams with nicknames like “Donkey Punch” well before he got his hands on the transcripts.
“What we expected going in was that we would find lots of occurrences of ‘Death Star,’ ‘Get Shorty,’” Christensen said, referring to some of the names Enron traders gave to the schemes.
But he found much more than he had expected.
“What really comes across from the tapes is the level of arrogance and the complete callousness of the impact of what they were doing was having on our ratepayers,” Christensen said. “Ruthless is the right word for it.”
When the transcripts were released, the national media quickly picked up the story.
“We didn’t anticipate the general outrage that the public would have,” Christensen said. “The David versus Goliath story seems to be pretty irresistible.”
* n n
FERC spokesman Bryan Lee isn’t certain that the national attention helped the utility’s cause all that much.
He said FERC already knew about most of the schemes the PUD uncovered. Adding more evidence to the federal government’s case only pushed an administrative law judge’s decision back, he added.
However, Christensen said the deadline had to be extended because FERC was late getting the transcripts to the PUD. He also said the wait is worth it because the case against Enron is now much stronger.
FERC has taken shots from Sen. Maria Cantwell, D-Wash., Inslee and others for failing to take action to cap prices during the energy crisis, and more recently for failing to block Enron’s attempts to get more money out of Snohomish County PUD and other utilities.
Lee said FERC’s ongoing investigation into Enron’s actions during the crisis seeks to answer that exact question.
“While it’s understandable that folks are frustrated, the commission cannot just summarily dismiss this case,” he said. “Due process takes time.”
Former Bonneville Power Administration Administrator Randy Hardy agreed that the PUD helped its cause by going after the Enron tapes. The PUD buys 80 percent of its power from the BPA.
“I certainly think it’s raised the PUD’s profile, both in the region and nationally,” he said. “In a way, that reflects a fair amount of credit on the PUD’s part for going out and digging this out.”
* n n
Ironically, the fight with Enron has been so heated that Christensen is working the long hours he moved here to get away from.
Betsy Christensen, his wife of 14 years, understands why he comes home late to their Bothell home with work in tow. Still, the family would like their lives to return to normal soon, so Eric Christensen can spend more time with his daughter Grace, 11, and son Carl, 8.
“I have made an effort to try to have dinner with them and put them to bed,” Christensen said, though he usually returns to work as soon as the lights go out for the kids.
A reprieve could be coming. The PUD’s case against Enron will go to trial before a FERC administrative law judge in August, when “the heavy lifting and fact-finding kind of stuff will be over,” Christensen said.
That’s when the PUD will find out if the work of Christensen – and a long list of other employees and outside help – will get the PUD out of paying Enron the contested $122 million, Gianunzio said.
“Eric is pretty much an unsung, quiet guy who’s willing to work very hard. He works in the weeds and digs the dirt out,” his boss said. “If we hadn’t done this stuff, we basically would have had to pay Enron, and they would have gotten away with that fraud.”
* n n
The PUD has taken its lumps in going after Enron, which although bankrupt, seems to have almost unlimited resources when it comes to trying to get money for its creditors.
Ask Robert McCullough, an energy consultant for the PUD who has also helped dig up evidence. “They clearly don’t respect us,” McCullough said.
McCullough remembered that the last time he went to Enron headquarters in Houston, Texas, to examine some documents, an executive there spent 10 minutes making fun of his outfit.
“When you go to Houston, there’s a lot of snickers about us being poor, uncultured barbarians,” he said.
McCullough estimated that Enron has 50 to 100 people working on the case against the PUD and several other utilities that are trying to get out of their Enron contracts. Bankruptcy proceedings show the company has spent more than $1 billion fighting its legal battles against the likes of the PUD.
Each time McCullough sent someone from his staff to Houston to cull through Enron documents, Enron would have a lawyer and two employees watch. “It was very intimidating,” he said.
McCullough said Christensen has been a secret assassin in the fight against Enron.
“Frankly, I don’t think they thought anyone from the PUD would be that good,” he said. “They must have thought, ‘Those funny people in the Northwest are making noise, but they’re stupid and no one will ever listen to them.”
To honor Christensen for his work, McCullough’s office sent him a baseball cap with an image of the lawyer boldly firing lightning bolts from the sky.
“He’s not Sean Connery,” McCullough quipped about Christensen’s unassuming personality. “That was the joke – here is this very normal-looking guy up in the heavens firing lightning bolts at the bad guys.”
When Christensen and the PUD took up the fight with Enron, it was “just another utility” to the energy trader. That’s far from the case now.
“It’s pretty clear that they thought we were just another dumb country utility that didn’t know how to understand the sophisticated schemes they were running,” Christensen said.
In the end, for Christensen it’s about evidence, and he says there is more than enough to prove that the PUD should never have to pay Enron another dime.
“It has to be very clear to everyone at this point that it’s going to be very difficult for them to get any more money from us,” he said.
Reporter Lukas Velush: 425-339-3449 or lvelush@ heraldnet.com.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
