Senate Energy Committee to examine Western energy market allegations

The Senate Committee on Energy and Natural Resources will meet May 15 to consider alleged price manipulation in Western US energy markets that may have occurred during 2000-01, a spokesman said May 8. The committee action stems from internal Enron Corp. documents released this week by US regulators.

May 10, 2002

4 min read

Maureen Lorenzetti
Washington Editor

WASHINGTON, DC, May 10 --The Senate Committee on Energy and Natural Resources will meet May 15 to review possible price manipulation that may have occurred in Western US energy markets during 2000-01, a committee spokesman said May 8. The committee action stems from internal Enron Corp. documents released this week as part of an investigation under way by the Federal Energy Regulatory Commission. FERC Chairman Pat Wood will be one of the witnesses testifying.
Western lawmakers are calling the Enron documents "a smoking gun" that they view as the strongest evidence yet that Enron officials deliberately manipulated the market for their own financial gain.

Sen. Barbara Boxer (D-Calif.) and fellow California Democrat Sen. Dianne Feinstein want the US Department of Justice to consider a criminal investigation of Enron and other energy companies that sold electricity and gas on the West Coast during the 2000-01 timeframe when prices spiked.
The Enron documents may also help solidify California's pending case before FERC that seeks billions of dollars in refunds from several energy marketers; state officials want FERC to void $42 billion in long-term wholesale power contracts signed when electricity prices were at record levels.

The Republican-led House has not yet announced whether it will hold additional hearings based on the new documents, which included internal communications that some suggest is evidence that Enron was able to manipulate the California electricity market by creating artificial supply shortages.
Justice is currently conducting a related civil investigation of Enron and heads an interagency task force on the Enron financial collapse that includes the Securities and Exchange Commission, FERC, and the Commodities Futures Trading Commission. Each agency in turn is conducting its own reviews.

Meanwhile, a White House spokesman May 7 said if anyone is illegally manipulating markets, they need to "be held accountable," and that in general the administration supports "very tough" enforcement of laws that protect consumers, including energy markets.
In related action, the SEC approved a Wall Street-endorsed plan that seeks to limit any conflict of interest between analysts and their investment houses by dramatically reducing the degree bankers can control analysts' reports and recommendations.

Hearing details
The upcoming Senate energy committee hearing will examine actions by policy-makers and market participants over the past 2 years that were taken to mitigate any market manipulation or failures. Lawmakers will also discuss whether further actions should be considered by regulators to ensure that consumers are served by well-functioning energy markets.
"This committee called for the FERC investigation that resulted in the release of these documents, and I'm pleased that Chairman Wood will update us on that probe," said energy committee Chairman Jeff Bingaman (D-NM). "The electricity provisions in the Senate-passed energy bill already tackle problems relating to market manipulation and data transparency. This hearing may tell us if there are other ways to further strengthen the bill's electricity title during conference."
As the head conferee for Senate Democrats on the energy bill, it's possible that Bingaman may chair the energy conference, depending on how it's organized, the committee spokesman said.

Energy bill update
The House leadership is not expected to announce who will participate in the energy bill negotiations until June.
Following that decision, conference negotiations are expected to take 2 weeks. Senate Republican leaders have predicted the final bill will not contain new leasing provisions for the Arctic National Wildlife Refuge or expanded fuel efficiency standards for automobiles.
What is expected to remain in the bill are extensive tax incentives for the oil and gas industry, a provision designed to encourage construction of a new trans-Alaskan pipeline to ship North Slope gas, and a clean fuel provision that triples fuel ethanol use and phases out the fuel additive methyl tertiary butyl ether.