03.07.05

Cantwell Calls for Senate Probe of Federal Response to Enron Tapes

Senator cites Enron evidence left behind in Houston,litany of missteps by federal regulators

WASHINGTON, D.C. – U.S. Senator Maria Cantwell (D-WA) today officially requested that the Senate Committee on Homeland Security & Government Affairs launch an investigation into federal regulators' handling of the Enron scandal and Western energy crisis. Cantwell laid out her case in a letter to Chairwoman Susan Collins (R-ME) and Ranking Member Joseph Lieberman (D-CT). Cantwell asked the Committee to probe the Federal Energy Regulatory Commission's (FERC's) failure to uncover evidence of Enron's market manipulation, including new Enron audiotapes recently discovered sitting in one of the bankrupt energy company's Houston warehouses.

"As policymakers, we have a responsibility to assess why our nation's chief energy regulators were so averse to pursuing this evidence in the first place," Cantwell wrote.

Cantwell also asked the Committee to review whether FERC officials complied with "the letter and the spirit" of rules that are supposed to limit improper contacts between the agency and industry representatives during its handling of the Western energy crisis of 2000-2001. In addition, she asked for an assessment of whether the measures put in place by the Commission since the crisis are adequate to prevent a repeat of Enron's market manipulation schemes.

"The types of manipulation that took place during the Western energy crisis cannot be tolerated, and the performance of the federal agency charged with rooting out these types of market abuse was an abject failure," Cantwell added. "The Commission's reluctant pursuit of entities such as Enron in the crisis' aftermath has only further tarnished the agency in the eyes of my constituents, and has raised a number of crucial policy questions for the Senate to consider."

This May will mark three years since Enron's "smoking gun" market manipulation memos were revealed. For more than two years after Enron's schemes first came to light, FERC failed to pursue additional audiotape evidence detailing Enron traders' intent to gouge Western energy consumers.

Meanwhile, Enron has sued a number of utilities in the West, including Washington state's Snohomish PUD, for "termination payments" associated with outrageously-priced power contracts cancelled in the mist of the energy giant's collapse into bankruptcy. Enron is suing Washington and Nevada utilities alone for almost half a billion dollars.

The Committee on Homeland Security & Government Affairs is the Senate's main body for conducting oversight of "the efficiency, economy and effectiveness" of federal agencies.