[Congressional Record Volume 148, Number 57 (Wednesday, May 8, 2002)]
[Extensions of Remarks]
[Pages E754-E755]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              ENRON GREED

                                 ______
                                 

                             HON. SAM FARR

                             of california

                    in the house of representatives

                         Wednesday, May 8, 2002

  Mr. FARR of California. Mr. Speaker, memos released this week by the 
FERC, confirm what those of us from California long suspected: Enron 
reaped millions upon millions of dollars off the backs of Californians 
by manipulating the energy market, cheating consumers, and lying to 
energy regulators and the State. Recently released internal documents 
clearly illustrate Enron's strategies to game the energy trading 
system. The Enron documents describe knowingly and consciously 
submitting false information to the State in order to increases energy 
prices.
  Enron's overwhelming greed is beyond outrageous; it may be criminal. 
Clearly, the billions of dollars stolen from Californians must be 
returned. It is also imperative that FERC reopen California's long-term 
contracts to prevent us from being further gouged.
  Throughout the California energy crisis the Governor of California 
joined with the majority of California's congressional delegation to 
call on the Federal Government to do something to stop price 
manipulation. I want to share with my colleagues an editorial from 
today's Los Angeles Times, that sums up the consequences of Federal 
inaction.

               [From the Los Angeles Times, May 8, 2002]

                       Make Enron Pirates Answer

       It was a scam after all.
       As California faced desperate electricity shortages in 2000 
     and 2001, power giant Enron was manipulating the market to 
     drive up prices and turn modest power shortages into critical 
     ones. This arrogant behemoth, since brought down by its own 
     hubris, toyed with the public health and safety of California 
     to boost its own profit, and there's finally a smoking gun to 
     prove it.
       Internal Enron documents released by the bankrupt company's 
     new management describe these unethical, if not illegal, 
     trading practices in detail and indicate that other companies 
     were doing the same thing. All the while, everyone from 
     Enron's then-chief Kenneth Lay to Energy Secretary Spencer 
     Abraham and regulators who should have smelled a rat were say 
     it was all California's fault. For failing to build enough 
     power plants. For adopting a power deregulation plan that 
     wasn't free-market enough. For environmental laws with a 
     Malibu mind-set.
       The Federal Energy Regulatory Commission refused to accept 
     its legal responsibility to rein in a wildly out-of-control 
     market. Ultimately, commissioners said, the free market would 
     work. For California, that meant a year of crisis, of rolling 
     blackouts, of one major utility going bankrupt and another 
     flat broke, of the state doling out $6 billion to buy daily 
     power and an additional $40 billion for long-term contracts 
     at what we now know are grossly inflated rates. FERC finally 
     acted out of political necessity; it was too little, too 
     late.
       The Enron memos go on in pages of sneering, ``gotcha'' 
     detail about such things as how to get paid for not putting 
     any energy on the grid. In another ploy, the firm would buy 
     power in California at a capped price of $250 a megawatt-hour 
     and resell it in Oregon for $1,200--at a time when California 
     was flirting daily with blackouts. The schemes had cute names 
     like Death Star and Fat Boy.
       When California complained and Gov. Gray Davis denounced 
     the energy manipulators, an Enron official said, ``California 
     is trying to perpetuate the greatest political dodge of the 
     last 100 years.''
       Yes, deregulation was flawed, California was short of power 
     plants and a drought in the Northwest had reduced 
     hydroelectric power. Davis was slow to react to the crisis. 
     But these factors alone did not cause the state's power costs 
     to go from $7 billion in 1999 to $27 billion the next year.
       FERC should help the state obtain substantial refunds from 
     the power-generating companies that charged exorbitant 
     prices. The state has asked for $9 billion, an amount that 
     federal regulators had deemed far too high but that they now 
     should regard as just about right.
       The Justice Department should investigate possible criminal 
     violations. The state should demand that all of its long-term 
     contracts, signed under the duress of the inflated market, be 
     nullified and renegotiated without delay. And FERC should 
     extend its modest market controls beyond the present Sept. 30 
     expiration. Electricity is vital to public welfare. It must 
     not be held hostage by manipulators piously invoking the free 
     market.
       They scoffed in Washington and Houston when Davis called 
     the energy manipulators pirates. Now we know why he was 
     right.


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