In Houston, the trials of former top Enron executives are unfolding. Former CEO Jeffrey Skilling is, according to legal experts and journalists covering his trial,>"/>
In Houston, the trials of former top Enron executives are unfolding. Former CEO Jeffrey Skilling is, according to legal experts and journalists covering his trial, going down. Enron founder Kenneth Lay might follow. More than 140 Enron executives were unindicted co-conspirators in the massive corporate fraud case.
But in Washington, Enron is about to make out like, well, a bandit. Again.
The bankrupt energy giant is in the process of trying to settle with creditors, as well as collect from companies it claims owe it money. Local creditors—including the Port of Seattle, Seattle City Light, Tacoma Power, and the Snohomish County Public Utility District—have filed claims against Enron. The claims are for shares of the money Enron ripped off during the manipulated energy "crisis" of 2000–01 that sent costs soaring in California and other Western states. In total, it's estimated that Enron defrauded Western utility customers of up to $1.8 billion.
In turn, Enron wants to collect from former customers who ended their contracts—even when Enron never delivered the promised electricity. One Seattle company, Ash Grove Cement, is being sued by Enron for nearly $5 million in "termination fees." The Snohomish County PUD is being sued for some $140 million—about $500 for every Snohomish County household—for a contract it was forced to sign at the height of the phony crisis. Snohomish is fighting back, claiming the contract was based on Enron's fraud, and therefore the PUD owes nothing.
Now the Federal Energy Regulatory Commission (FERC), a federal agency overseen by three Bush-appointed commissioners that regulates interstate transmission of electricity, natural gas, and oil, has come out with a proposal for settling the Washington claims. And it stinks.
FERC lawyers announced April 7 that they have reached agreement with Enron lawyers on a proposed plan to award local utilities a combined sum of about $10 million for their trouble. Enron's bankruptcy judge in Houston is paying off claims at the rate of 22.9 cents on the dollar, meaning the former Enron customers, combined, would get all of a little over $2 million. That's a bit more than one cent on the dollar of what was stolen, minus legal fees, of course. An additional $400 million award has a priority lower than so many other claims that it likely never will be paid.
How much did Enron steal in our area? The Port of Seattle estimates Enron's market manipulations cost King County taxpayers about $27 million in extra energy costs. Snohomish County PUD puts its figure at $40 million. Seattle City Light says $80 million. Tacoma Power, which claims $10 million in losses, filed a $175 million antitrust lawsuit against Enron in 2004. U.S. Sen. Maria Cantwell, D-Wash., and other critics of the proposed deal claim that the FERC plan would also seal from public view legal documents essential to the utilities' ongoing legal cases against Enron.
FERC has defended its proposal and denies legal records would be sealed. But a March 10 FERC filing says that if the settlement is accepted, FERC will withdraw all pleadings, exhibits, and testimony from the public file and join Enron in opposing any motion to reopen them. FERC's staff has also sided with Enron against the Snohomish PUD's claim that it shouldn't owe $140 million for canceling a contract with a company that had fraudulently jacked up rates. And FERC accuses Cantwell, a Snohomish County PUD customer, and in particular the Snohomish utility of mounting a (gasp) public relations campaign in efforts to reclaim the stolen money.
What is the rationale for FERC's proposed pittance of an award? The prevailing theory among local lawyers working on the case is that FERC is colluding with Enron. "If this proposed settlement isn't on Enron's wish list, then I'm not sure what is," says U.S. Rep. Rick Larsen, D–Lake Stevens, whose congressional district includes part of Snohomish County. In a letter to FERC, Larsen and U.S. Rep. Jay Inslee, D–Bainbridge Island, called the cancellation fees "tantamount to theft."
"The agency that is supposed to be the federal watchdog protecting us is adding insult to injury," adds Cantwell. She's also exercised over the recent hiring by FERC of a lawyer who worked in Enron's Portland office. Mary C. Hain, the new hire, was cited in a Senate report as being part of Enron's effort to prevent FERC from investigating the company during the crisis. Portland Gas & Electric, which was decimated by Enron, celebrated its first day of being "Enron-free" just last week.
FERC is the same agency that came in for blistering criticism for enabling Enron by refusing to intervene during the 2000–01 Great Energy Rip-off—just like Hain and her colleagues wanted. Now that it has been conclusively demonstrated that Enron stole much of its money from our state during that period, FERC is attempting to rip off Washington state utility consumers. All. Over. Again.