08.03.05

Cantwell to Intervene on Behalf of Consumers in FERC Proceeding

Senator Calls on FERC to Void Long-Term Contracts

WASHINGTON, DC - U.S. Senator Maria Cantwell (D-WA) today requested Federal Energy Regulatory Commission (FERC) take action to remedy Enron's manipulation of the Western energy market in a letter to FERC Chairman Pat Wood.

As the result of a FERC investigation requested by Cantwell at a Senate Energy and Natural Resources Committee hearing on January 29, Enron disclosed memoranda that make clear that it manipulated the energy market which artificially inflated prices throughout the West.

In the letter, Cantwell said she would today file a motion formally requesting that FERC take action to protect consumers on a case involving some Northwest utilities and their long-term contracts with Enron.

"Unless FERC voids these Enron contracts, Washington state consumers will have to pay artificially inflated prices for years to come," Cantwell said. "We deserve relief from the double-digit rate increases resulting from market manipulation by Enron."

Cantwell's motion:

Calls on FERC to follow the law by finding long-term contracts with Enron in the West "unjust and unreasonable." Calls on FERC to take actions to void Enron's long-term contacts with Washington state utilities. Argues that FERC should, by now, recognize the link between the California and Northwest energy markets. Washington state ratepayers continue to bear the burden of long-term contracts with Enron. The Bonneville Power Administration alone has $700 million worth of such contracts. Both the Snohomish Public Utilities District and PacifiCorp have filed petitions with FERC for relief from long-term contracts with Enron.

The text of the motion's cover letter follows:

Cantwell - FERC Press Release May 8, 2002 Page 2 of 3 May 8, 2002

The Honorable Pat Wood III Chairman Federal Energy Regulatory Commission 888 First Street NE, #11A Washington, DC 20426

Dear Chairman Wood:

I write regarding the release this week of documents revealing Enron's strategies for manipulating Western energy markets during the electricity crisis of 2000-2001. I believe these documents reinforce what many Washington state consumers had already believed: that Enron was manipulating prices in the Western market, contributing to the double-digit rate increases many of my constituents faced today.

I am pleased that the Federal Energy Regulatory Commission (FERC) uncovered these documents during the course of the investigation I requested at the January 29 Senate Energy and Natural Resources Committee hearing on Enron's collapse. I also ask that -should FERC's investigation turn up evidence of potentially criminal wrong-doing - the Commission turn this information over to the Department of Justice, which may soon begin its own investigation of Enron's activities in Western energy markets.

I also believe this new information regarding Enron's strategies to drive up prices in the West lends further credence to the notion that FERC must find long-term contracts signed by many Washington state utilities during the height of the crisis "unjust and unreasonable." As we have discussed on numerous occasions, consumers in some areas of my state are suffering through rate increases of close to 60 percent. Many of their utilities remain bound to multi-year contracts signed at a time when wholesale power prices skyrocketed to as much as 1000 times the normal rate. While these contracts were appealing compared to prices on the dysfunctional spot market, they are now two to three times the current market rates.

Thus, despite the fact wholesale power prices have now returned to a more reasonable realm, many Washington state consumers will continue to pay for years to come - unless FERC acts to void or reform these contracts. I therefore ask that that the Commission use its authorities under Section 206 of the Federal Power Act to void or reform these contracts, which mounting evidence suggests are the result of market manipulation by entities such as Enron.

I appreciate that FERC on April 11 initiated a proceeding to consider the complaints of some of these utilities (Docket No. EL02-26-000, et al. [consolidated]). However, I also believe that the Commission must ensure that the process for reviewing these complaints is fair and structured in a way in which Washington state consumers' voices can be heard.

In particular, I was troubled by the fact that the Commission's order setting these complaints for hearing failed to recognize what should by now be an obvious link between prices in Western spot and bilateral markets. In addition, I am concerned by the Commission's suggestion that it may choose to ignore the statutorily mandated "just and reasonable" standard for review of these contracts, and instead place such a stringent burden of proof on these complainants that Washington state consumers will be denied any chance for relief.

Thus, I wanted to inform you that I intend to file a motion for intervention in this case as well as a request for rehearing of FERC's April 11 order.

Again, thank you for the work that you and your staff are doing to investigate the activities of Enron in Western energy markets. Please do not hesitate to contact me if I can be of any assistance. I firmly believe that vigorous completion of this investigation will help answer important questions about the recent chaos in Western energy markets, and provide the basis for relief for Washington state consumers who have been so severely harmed by electricity markets subject to manipulation by Enron.

I look forward to continuing this constructive dialogue and working with you to ensure that Congress and the American people can have confidence that our federal regulators fully understand how the past year's crisis occurred and how we can best prevent it from happening again.

Sincerely,

[original signed] Maria Cantwell U.S. Senator