07.20.05

Cantwell, Reid Cry Foul on Enron's Energy Bill Lobbying Efforts

Western Ratepayers Could Foot Tab for Enron's Lobbying and Pay Raises for Enron Board of DirectorsSenators Push Energy Negotiators to Ignore Enron's Last-Ditch Attempt to Bilk Western Consumers

WASHINGTON, D.C.—U.S. Senator Maria Cantwell (D-WA) and Democratic Leader Harry Reid (D-NV) today blasted Enron's efforts to undermine a Senate energy bill provision that would protect Western consumers from more gouging by Enron. The Senate-passed energy bill contains a provision authored by Cantwell that would prohibit a bankruptcy court from enforcing fraudulent Enron power contracts with Western utilities, including entities in Washington, Nevada and California. In a letter sent today, the Senators asked lead energy negotiators to "look past Enron's misleading arguments" and said that Congress "must not condone Enron's efforts to once again game the system."

"This is the height of greed and arrogance," said Cantwell, a member of the Senate Energy Committee. "Somehow this corrupt corporation can find the money to hire a lobbyist, vote themselves a pay raise and go after even more money from Washington state consumers. It makes me even angrier when I think about Enron's lobbying firm charging even more money than what Snohomish PUD's Enron contract is worth. It is past time for Congress to stand with consumers and give Washington ratepayers a fair shot at getting the justice they deserve."

"It is beyond absurd to think that now, some four years after the Enron scandal stripped the retirement security from thousands of Americans, that Congress would see fit to go to bat for this corrupt company," said Reid. "The people of Nevada and the American people deserve to know that Congress will stand with consumers, not a manipulative, fraudulent corporation. I join Senator Cantwell in expressing outrage and hope my Senate and House colleagues will stand with us."

During the Senate Energy Committee's debate on energy legislation, Cantwell authored a measure that gained bipartisan support, which would prohibit the Enron bankruptcy court from enforcing payments on power contracts that are unjust, unreasonable, or contrary to the public interest. Cantwell wrote the provision to target manipulated power contracts between Enron and utilities such as Washington state's Snohomish PUD and others in the West. The contracts were cancelled when the energy giant began its slide into bankruptcy. But once they were cancelled, Enron turned around and sued utilities for "termination payments," including $122 million from Snohomish PUD.

Less than a month after the Energy Committee passed Cantwell's Enron relief provision, Mr. Robert C. Odle, Jr. filed papers with the Secretary of the Senate and Clerk of the House of Representatives, indicating his intent to lobby on behalf of Enron on energy matters.

In their letter to energy bill negotiators, Cantwell and Reid called Enron's arguments against the provision "shockingly disingenuous"—particularly given the fact that its lobbying firm has filed claims in the bankruptcy court for more than $160 million in fees. The Senators also noted that Enron's board of directors earlier this month voted to increase their own salaries as much as sixfold. These funds would be paid out of the Enron bankruptcy estate—and, if Enron has its way, out of the pockets of Western ratepayers.

Negotiators are currently reconciling House and Senate versions of the energy bill, and are expected to take up the legislation's electricity title, including Cantwell's Enron provision, as soon as tomorrow.

[Text of letter follows]

The Honorable Joe Barton Chairman Committee on Energy and Commerce 2125 Rayburn House Office Building Washington, DC 20515

The Honorable Pete V. Domenici Chairman Committee on Energy and Commerce 364 Dirksen Senate Office Building Washington, DC 20510

The Honorable John Dingell Ranking Member Committee on Energy and Commerce 2125 Rayburn House Office Building Washington, DC 20515

The Honorable Jeff Bingaman Ranking Member Committee on Energy and Natural Resources 364 Dirksen Senate Office Building Washington, DC 20510

Dear Chairmen Barton and Domenici, and Ranking Members Dingell and Bingaman,

We write to urge you to include in the comprehensive energy bill (H.R. 6) conference report a very modest yet critically important provision contained in the Senate-passed version of this legislation. Section 1270 of the Senate bill would prevent a bankruptcy court from unilaterally enforcing fraudulent Enron power contracts, and collecting additional profits from the same consumers already severely harmed by Enron's illegal market manipulation schemes during the Western energy crisis of 2000-2001.

It has come to our attention that Enron—even in bankruptcy—has gone so far as to retain a federal lobbyist to defeat this important consumer protection provision. We view this as nothing short of an outrage. Given the unprecedented circumstances presented by Enron's bankruptcy and its legacy of power market manipulation, we hope you will thoroughly review the facts in this matter. We believe that any such review will lead to the common-sense conclusion that Section 1270 is a worthy provision. It simply ensures that Western utilities and the consumers they serve are allowed to seek justice in the venue Congress created to oversee "just and reasonable" rates in our nation's power markets.

Section 1270 of the Senate-passed bill would affirm the Federal Energy Regulatory Commission's (FERC's) authority to determine whether payments associated with Enron power contracts entered into during the Western energy crisis—and impacted by the company's price gouging schemes—are lawful under the Federal Power Act. As you know, a number of utilities in the West were counterparties to Enron contracts cancelled when the corporation began its scandalous collapse into bankruptcy. But despite the substantial body of evidence now documenting the brazen market abuses Enron committed to drive up power prices, Enron has nevertheless turned around and sued these utilities in bankruptcy court for "termination payments," for power that was never even delivered. Today, there is more than half a billion dollars at stake for consumers in the states of Washington, Nevada and California.

Currently, there is a jurisdictional dispute between a federal bankruptcy court and FERC as to which of those two forums should decide whether Enron acted consistent with federal energy law. We believe this issue is ripe for legislative action, given the fact that the court in December 2004 took the extraordinary step of enjoining FERC from proceeding with an evidentiary hearing related to the "termination payments" issue.

Certainly, we do not believe that Western ratepayers should be required to pay Enron one penny more in profits. But in light of Constitutional concerns that were considered at some length by the Senate Energy and Natural Resources Committee, Section 1270 does not substantively interject the Congress into the underlying legal disputes. Instead, it simply stipulates that the federal agency whose statutory responsibility is to protect ratepayers -- and not a bankruptcy court whose priority is the welfare of the estate -- should decide whether Enron is entitled to collect more than half a billion dollars in "termination payments" for power Enron never delivered.

Section 1270 is supported by numerous Supreme Court precedents that recognize the right of the Congress to allocate responsibilities between federal agencies and bankruptcy courts on matters that have not been subject to final resolution. And it is certainly supported by our constituents, who should at the very least have issues of this significance decided in the proper forum.

It is our hope that the conference committee will look past Enron's misleading arguments and last-ditch efforts to influence consideration of the energy bill and Section 1270. Congress must not condone Enron's efforts to once again game the system and circumvent our nation's energy laws and regulations. The public statement of Enron's lobbyist that Section 1270 is tantamount to "picking winners and losers" is not just wrong in fact, it is shockingly disingenuous given that the same firm has already filed claims for more than $160 million in compensation from the Enron bankruptcy—even exceeding in value some of the power contracts currently under review at FERC.

We also hope you will consider the patently absurd result should Enron succeed in this gambit. Without the benefit of the proper regulatory review, our constituents would be forced to pay hundreds of millions of dollars in additional Enron profits, helping to bankroll the very firm lobbying against their interests. While Enron has already succeeded in bilking billions of dollars from the Western economy, our constituents would be on the hook yet again—perhaps to help pay the corporate directors overseeing Enron's bankruptcy, who just earlier this month voted to increase their salaries by as much as sixfold. Our constituents' money would even be used to compensate corporations on Enron's creditors list that have themselves been fined by the Securities and Exchange Commission and Federal Energy Regulatory Commission, related to either their role in Enron's bankruptcy, or their own schemes to manipulate Western energy markets.

Any such conclusion to this matter would add additional insult to the substantial injury already suffered by the ratepayers of the West. On the contrary, Section 1270 of the Senate-passed bill would ensure a fair and transparent process for the resolution of this tragic chapter in the Enron saga, and we ask for your support of this provision.

Thank you for your consideration of this matter, which is of such extreme importance to our constituents.

Sincerely,

Maria Cantwell

Harry Reid