06.29.06

Cantwell Delivers Remarks on Senate Floor Following Win In Enron Fight

Energy regulators rule against Enron’s attempt to collect $120 million from ratepayers for power the bankrupt energy trader never delivered

WASHINGTON, DC – Thursday, U.S. Senator Maria Cantwell (D-WA) went to the Senate floor to discuss the Federal Energy Regulatory Commission (FERC) ruling Wednesday night in favor of Snohomish Public Utility District (PUD). The ruling struck down Enron’s attempt to collect about $120 million from ratepayers for power the bankrupt energy giant never delivered. In denying Enron’s claim, the Commission concluded that financial fraud induced Snohomish to enter into the contract. The text of Cantwell’s remarks on the Senate floor Thursday morning follows below. To listen to audio of Cantwell’s remarks, go here

Since taking office, Cantwell has worked to get relief for Washington state ratepayers from the Western energy crisis and Enron’s baseless lawsuit against the PUD. In the Energy Policy Act of 2005 signed into law last summer, Cantwell secured a provision (Section 1290) to prevent a bankruptcy court from forcing Snohomish PUD and its customers to fork over millions of dollars to Enron. This measure reaffirmed FERC’s authority to decide whether charges related to manipulated power contracts should be enforced. The Commission exercised this authority in the orders issued last night.

Snohomish PUD’s Enron contract was cancelled when the energy giant began its slide into bankruptcy. But once they were cancelled, Enron turned around and sued utilities and businesses for “termination payments,” seeking to collect profits on power that was never even delivered.

[Cantwell’s remarks on the Senate floor, as delivered Thursday morning]

“Last night consumers of Washington State received some welcome news. The Federal Energy Regulatory Commission decided after five long years that the ratepayers of Snohomish County, Washington do not have to pay Enron $120 million for power never delivered during the western energy crisis at exorbitant power rates. The Western energy crisis was certainly a tragic chapter demonstrating corporate greed and the need to make sure that we have regulatory fairness.

“This fight really goes back to the spring of 2001. Since then I’ve been working along with my colleagues from the Pacific Northwest and other parts of country to make sure that ratepayers were treated fairly. There were a lot of stops and starts in this process. There were a lot of times when our faith in the process started to erode. But one of the high points came last summer when the Senate Energy Committee came together in what I thought was an unprecedented effort to discuss, debate, and pass an amendment that basically protected rate payers throughout the country to make sure that they had a fair shot at justice.

“This was an important amendment that I offered that made sure that everyone understood that the federal regulatory authority was the proper place to decide whether utilities like Snohomish County PUD should have to pay Enron for power at exorbitant rates resulting from Enron’s market manipulation. I know the presiding officer knows this issue well and knows that there were many other parts of country that also were impacted by these same issues. That’s why I want to make sure that we give thanks to all the people who played a constructive role in this debate.

“I want to thank Senator Ensign whose ratepayers in Nevada were facing a similar situation and of course Leader Reid. But Chairman Domenici, who ran the Energy Committee in a fair and open process that allowed us to have this serious debate, deserves credit along with Ranking Member Bingaman for his focus on consumer protection along with Senator Smith, Senator Craig, Senator Allen, Senator Wyden, and Senator Murray, and all of my Democratic colleagues on the Committee.

“We also had some incredible help and support from the Energy Committee counsel and staff: Chief Counsel Sam Fowler and Judy Pensabene along with other in-depth analysis from Leon Lowery and Lisa Epiphane. These staff people helped through a challenging legal issue but in the end make sure make sure that federal authority stayed exactly where it was and that that federal entity gave the ratepayers the important relief that they needed.

“The other side of the story is that the Snohomish county PUD—this is a David-and-Goliath story—who did the job of taking on a big power company and saying that they were not going to be forced to pay on manipulated power rates. They fought for the ratepayers of their state and they fought for justice to make sure that this issue never happens again to consumers in America. It shows that sometimes the little guy can win. And it shows that the Snohomish County PUD that fought back these fraudulent $120 million in bills was vindicated in this process.

“But I have to say it was an important battle for them to fight. With the average county resident would have been forced to pay over 400 additional dollars to Enron in utility rates, school districts who would have seen a $2.5 million increase in electricity costs that could have gone to hiring teachers or paying for books, and for the businesses and other ratepayers in this country who were impacted economically by the exorbitant rates that we have been paying from Enron. Last night's announcement will bring a big sigh of relief.

“Now we need to make sure that we get on with the task of making sure that this never happens again. When it comes to energy markets that drive our economy, aggressive consumer protection must be part of federal regulators’ overall effort on their job overseeing the wholesale rates of electricity markets. It is far better that we continue to make sure that the federal regulators do their job and if that’s what Congress needs to do by passing amendments such as the Cantwell amendment we will continue do so.

“We took some steps in the federal energy bill last year saying there's a federal ban on market manipulation; that is when it comes to electricity markets and natural gas markets. This senator believes there's more to be done in other energy markets. Just this morning we woke up to this news that BP North America has been indicted for market manipulation of propane markets. This is a case that is just starting to be made but we'll hear the evidence of this case.

“Our work is not done until we make sure that the commodities Future Trading Commission, the Federal Trade Commission, and other federal agencies have all the tools they need to make sure that there is transparency in energy markets, to make sure that propone, jet fuel, oil, diesel, gasoline markets all are protected with the transparency and oversight to make sure consumers aren’t impacted by market manipulation.

“In the end, it is the American consumer and the American economy that suffers when we don’t have functioning energy markets. So I look forward to working with my colleagues to continue to make sure that he we protect consumers from exorbitant energy rates, to make sure that we do our job at the federal level to enforce the law and to uphold those standards that make these markets work and that continue to help our economy grow.

“Again, I want to thank all of those who are helpful in this long process to bring justice for ratepayers in the State of Washington and for all those who sought to give a good hand in the effort to make sure that our federal laws were held up, implemented, and that we didn't allow this issue to continue to be punted around a variety of bankruptcy courts but instead made sure that justice was delivered to ratepayers.”

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