05.15.02

Cantwell: Enron “mugging” Washington state

WASHINGTON, DC – Declaring that "there is a mugging happening in our state," Senator Maria Cantwell (D-WA) today said at a Senate Energy Committee hearing that "FERC – the only cop on the block – has to act" to void hundreds of millions of dollars worth of long-term contracts between Northwest utilities and Enron.

Under questioning from Cantwell at the hearing on Enron’s price manipulation strategies, Federal Energy Regulatory Committee Chairman Pat Wood said that all contracts impacted by price manipulation would be unjust and unreasonable. Wood also said that the strategies outlined in the Enron memos constituted price manipulation.

Under section 206 of the Federal Power Act, FERC can void contracts that it finds unjust and unreasonable. Cantwell said that the logical conclusion of Wood’s testimony is that long-term contracts held by Northwest utilities with Enron should be voided.

Cantwell told Wood: "You are the only policeman on the street, and there is mugging happening in my state. FERC – the only cop on the block – has to act."

Key facts:

BonnevillePower Admin.:

Electric rate increase during energy crisis h 46%

Total long-term contracts with Enron (estimated) $700 million

Amount per utility or customer (estimated) $5 million

BPA and Snohomish PUD continue to hold nearly $1 billion in long-term contracts with Enron that are far above current market value. BPA’s long-term contracts represent more than $5 million per utility customer. BPA wholesale rates have increased 46% during the crisis, Seattle City Light’s by nearly 60%, and Snohomish PUD’s by 49%. Snohomish PUD and PacifiCorp have petitioned FERC for relief under this section and Cantwell has formally supported that petition in a letter to FERC. The internal Enron memos showing price manipulation were released as a result of a FERC investigation requested by Senator Cantwell on January 29, 2002 during a Senate Energy Committee hearing. Seattle City Light and Tacoma Public Utilities have petitioned FERC for $348 million in refunds from short-term contracts with Enron. During the energy crisis, about 25% of Seattle City Light’s short-term contracts were with Enron.