[Congressional Record Volume 150, Number 82 (Tuesday, June 15, 2004)]
[House]
[Pages H4147-H4153]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         MANIPULATIONS OF ENRON

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 2003, the gentleman from Washington (Mr. Inslee) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. INSLEE. Mr. Speaker, I came tonight to the floor of the House to 
address an outrage, perhaps the largest fraudulent activity in American 
history which has resulted in literally billions of dollars being 
stolen from American ratepayers for electricity in the western United 
States. And this, of course, is the outright theft from West Coast 
ratepayers by the Enron Corporation. And I have come to the floor 
tonight because, unfortunately, the energy bill that passed this 
Chamber today did absolutely nothing whatsoever to restore one ounce of 
justice for the consumers on the West Coast who were so grievously 
ripped off by the Enron Corporation.
  Mr. Speaker, the sad fact is that today the House of Representatives 
had an opportunity to do something about an outrage that has not been 
remedied now despite our efforts for the last 3 years. Because the sad 
fact is that the Enron Corporation and others manipulated with 
unfortunately great effect the energy market in the West Coast starting 
in 2000. This manipulation resulted in West Coast ratepayers paying 
conservatively in the billions of dollars of overcharges to Enron and 
other energy traders. And the law of the United States as written is 
designed to prevent that and does prevent that if we had a cop on the 
beat to enforce the laws. But, unfortunately, what happened in the 
years 2000 and 2001 is that Enron found a way to gain the system. They 
found a way to essentially shut off generating capacity for the western 
coast of the United States and, as a result, drive up the prices 
dramatically, and they were unfortunately successful in this outrageous 
conduct. In fact, rates being paid by utilities, and therefore 
ratepayers in the western United States went up by a factor of a 
thousand percent, sometimes on a daily basis. And Enron was successful 
in doing this because they decided not to follow the law. And, 
unfortunately, they had some allies in not following the law, and that 
was this Federal Government, which did not enforce the law of the 
United States and allowed Enron to foist billions of dollars of 
overcharges on the ratepayers on the West Coast.
  Now, just to put a sense on how grievous this is, in Snohomish 
County, Washington, in the northern Puget Sound area, an area which I 
represent, ratepayers are still paying today half as much more than 
they should be paying, 52 percent more than they should be paying for 
electricity due to the depredation, the rapaciousness of the Enron 
Corporation.
  This is now over a billion dollars in the State of Washington of 
overcharges that ratepayers are still paying today. And we believe, at 
least on my side of the aisle, that the Federal Government should take 
action to get refunds back from the Enron Corporation as a result of 
these wrongful activities.
  Unfortunately, today, the Republicans refused to allow an amendment 
to be even voted on in this Chamber to get that money back for 
ratepayers on the West Coast. It would have been a simple amendment. I 
offered it in conjunction with the gentleman from California (Mr. 
Filner) and the gentleman from Oregon (Mr. DeFazio), that would have 
required that refunds would have been given to these ratepayers going 
back to the year 2000. But unfortunately the majority party decided to 
side with Enron, the bankrupted corporation, bankrupt both fiscally and 
morally. They sided with Enron rather than with consumers and stood 
against giving consumers the refunds that they are owing.

                              {time}  1815

  This is outrageous, and I know it is outrageous because the offenses 
of which I speak are not hypothetical. We have very clear evidence of 
what Enron did, and that evidence has been disclosed by very vigorous, 
assertive, and healthfully combative Public Utility District in 
Snohomish County PD, in Snohomish County, Washington, because what they 
did was they forced the disclosure of audio tapes that these Enron 
traders had kept of their conversations when they came up with their 
nefarious deals.
  The Bush administration and their Federal Energy Regulatory 
Commission did not want the public to hear these tapes. They did not 
want the public to have access to the gamesmanship that went on that 
cost consumers so many millions of dollars, but Snohomish County PD was 
very energetic in getting these tapes released. Now they have come 
forward, and what is on these tapes would shock even the saltiest of 
sailors, not only because of the language that was used but because of 
the immoral, unethical conduct where these traders basically sacrificed 
willingly the ratepayers in order to juice out another million dollars 
or so a day for the Enron Corporation.
  I would like to go over some of these, and we have deleted the 
expletives that were unfortunately frequently in their conversations, 
but we are trying to keep the gist of their conversation, and I am just 
going to refer to some of them here. These are audio tapes transcripted 
by Snohomish County Public Utility District of traders for Enron 
Corporation talking to one another.
  First trader: So the rumor is true that they are taking all the blank 
money back from you guys, all that money you stole from those poor 
grandmothers in California?
  Response: Yeah, Grandma Millie, and she is the one who could not 
figure out how to blank vote on the butterfly vote.
  Response: Now she wants her blank money back for all the power you 
jammed her for, for $250 per megawatt hour.
  That is a conversation between Enron traders.
  Now, when they talk about jamming Grandma Millie, what they mean by 
this is they have constricted the supply down, going to the California 
ratepayers and Washington for that matter and, therefore, boosted the 
price up, in this case to $250 a megawatt hour, in many cases up to 
$1,000 a megawatt hour, 10 times what was the previously going rate.
  Now this type of conservation was repeated over and over and over 
again by these traders.
  Second example. The Enron traders discovered a handy little 
technique. They found a way to congest transmission lines so that when 
they were congested, energy could not get through. So they would 
willfully schedule transmissions in a way that would prevent 
transmission from occurring, and when that happened, the price 
skyrocketed because of the existing demand. So here is a conversation 
here. They are talking about the congestion.
  Then the other trader states: If the line's not congested, I just 
look to congest it. If you can congest it, that is a money maker, no 
matter what.
  And it was a money maker, because when they congested these lines, 
the price skyrocketed, sometimes tenfold, and when it skyrocketed, 
several things happened. First off, you actually had brownouts in 
California, but you also forced utilities like Snohomish County Public 
Utility District in Washington State to enter into long-term contracts 
to try to ameliorate, to try to reduce the outrageous hits they were 
taking in these skyrocketing prices. Enron tried to sort of lure them 
into these long-term contracts and were sometimes successful because 
they were punishing ratepayers with these outrageous prices.
  Third example. The Enron traders talked about who they would like to 
be running the Federal Government, and they talked about it in terms 
about who would be on Enron's side. They talked about who would be 
favorable to Enron, who would sort of wink at the wrongful actions by 
Enron, who would be sort of the cop who was asleep at the switch; and 
they reached a conclusion pretty quickly.
  First off, they noted that Enron was the biggest contributor to the 
election campaign of President George Bush. They then noted that would 
it not be great if the next Secretary of Energy was Ken Lay, the 
disgraced CEO of the Enron Corporation. What they said was, How great 
would that be for all the players in the market. He would open these 
markets up.
  Now, they were right on that. If Ken Lay was Secretary of Energy, he 
would have opened up these markets and

[[Page H4148]]

would not have taken any steps to try to tamp down the rapacious 
behavior of Enron, but it turned out they did not need Ken Lay as being 
Secretary of Energy because the people in the Bush administration were 
quite effective in not doing anything to lift a finger to stop Enron 
from gouging west coast ratepayers. They got what they wanted. They got 
cops on the beat who just winked and let the bank robbers take money 
out the door without doing anything about it.
  It is very interesting here. The prediction of the Enron traders 
that, number one, they could congest these lines and drive up prices 
was accurate, much to the damage of people in Washington, Oregon and 
California; but their second prediction, that the President of the 
United States would let them get away with it, was accurate, too. That 
is the reason why it was such a grand shame here today when the 
Republican Party would not let this House vote on an amendment to 
simply enforce these laws, to finally blow a whistle on Enron and blow 
a whistle on the Bush administration for their failure to enforce this 
law.
  I would like to yield to the gentleman from Oregon (Mr. DeFazio) who 
has been fighting this battle now for several years, who has been a 
stalwart on it, who has a never-give-up attitude.
  Mr. DeFAZIO. Mr. Speaker, I thank the gentleman for his leadership on 
this issue.
  Of course, the interesting thing is that we in the Pacific Northwest 
were the tail of the dog here. On manipulated markets for profit in 
California, they drove up wholesale markets West-wide. In fact, some 
570 days they manipulated markets. It has now been found to be more 
than 460 days.

  The gentleman might remember the meeting we had with Vice President 
Cheney just about 3 years ago now. We got a bipartisan meeting together 
and Democrats and Republicans came together and said to the Vice 
President, as Northwesterners we are really concerned about what is 
happening with electricity prices, $2,000, $3,000 a megawatt. This 
cannot be market forces at work. Energy is usually selling at $30 a 
megawatt, $40 a megawatt. Out in the Pacific Northwest, it is 50, 100 
times more.
  You probably remember the Vice President. He dismissed us with his 
usual, it is hard to say, I guess sneer would be the best way to say, 
and say we just simply did not understand, poor little babies. These 
were market forces at work. This had nothing to do with market 
manipulation, absolutely nothing; and if we did not build a 500 
megawatt plant a week for 16 years, this would continue, $2,000, $3,000 
megawatt energy.
  A funny thing happened on the way to the market forces here, and that 
is, the Senate changed hands. Diane Feinstein then managed to schedule 
a hearing to bring in the people from the Federal Energy Regulatory 
Commission and other people from the Bush administration to have them 
testify on the record under oath about these market forces; and you 
know what, they suddenly decided there was market manipulation. They 
quickly imposed price caps, and then the whole thing began to unravel.
  They protected their contributing class of Mr. Lay and others as long 
as they could. As these gentlemen said here in these transcripts, Enron 
was the single largest contributor to George Bush, and Ken Lay was the 
single largest individual contributor to George Bush over his lifetime 
until this campaign. He may still well be contributing and the 
President may still be taking his money. Ken Lay has not gone to jail 
yet so I guess he can still contribute.
  Mr. INSLEE. Mr. Speaker, I think it is important to go into our 
conversation in some detail with the Vice President.
  This was a bipartisan meeting with members of the west coast 
delegations, and what we did is we laid out the evidence for the Vice 
President, and stoplights in California were not working at the time we 
were talking to the Vice President of the United States, begging him 
for assistance. What the evidence we showed him was that at the time we 
were talking to him fully 32 percent of all the generating capacity in 
the west coast of the United States was turned off. At the time that 
stoplights were going out in California, Enron and its co-conspirators 
had turned off almost a third of all the generators in the west coast. 
They have tried to lay this excuse that, well, we were maintaining 
them, which was pretty lame because on the average in the last 12 years 
there has only been 2 to 4 percent of these plants down.
  So what we told the Vice President, in a pretty cogent way is, Mr. 
Vice President, it is obvious someone is gaming the system. There is 
clear manipulation going on. There is skullduggery. This is a scandal. 
One-third of the generators are turned off. You are causing brownouts 
in California. We are having 1,000 percent run-ups in the State of 
Washington. We need your help. We need your help to force FERC to 
enforce the law. And I will never forget what he said to that request.
  He looked at us in the eye, and he said, and this is about as close 
to a quote as I can come: you know what your problem is, you just do 
not understand economics. Now, we do understand economics. My degree 
happens to be in economics. It is just that we do not understand 
Enronomics. We do not understand Enronomics that the President and the 
Vice President of the United States sit on their hands and do nothing 
while consumers are gouged 10, 20 billions of dollars a year and are 
still suffering as a result of this Federal Government's refusal to 
act.
  Mr. DeFAZIO. Mr. Speaker, we need to spend more time on the past here 
because people need to understand what happened with this market 
manipulation, and in fact, of course, the head of the Federal Energy 
Regulatory Commission, Pat Wood from Texas, chosen by George Bush and 
Ken Lay, wants still to push forward with this deregulation model and 
impose it on the rest of the United States of America. After all, it 
was a great success. The only problem was that Enron got caught. A few 
people made a lot of money. A lot of people had to pay a lot more for 
their electricity, but that is kind of the way they run the tax system 
in this country.
  I would like to draw a parallel to something that is even more on 
people's minds. In the Northwest now it is not the heating system. The 
high rates are not quite as troublesome, although they certainly 
trouble our businesses every day, particularly those that are energy 
intensive and are contributing to our high unemployment rate, but I 
would compare it to what is happening with gasoline.
  We are hearing the same refrain from the administration about the 
prices of gasoline, that these are market forces. Yet, in the last 10 
years, there have been 2,600 mergers in the oil industry. We find that 
every company in the oil industry, those few that are left, are 
enjoying record profits; and they are saying, oh, these are just simple 
market forces at work, and again, refusing to act, and of course, this 
time there is no prospects, since they control both Houses of Congress, 
that someone can convene hearings to get to the bottom of the market 
manipulation that is going on here.
  It starts with OPEC, and the President, of course, is a great 
believer in free trade. If he is such a believer in free trade, why is 
he letting the OPEC countries violate the World Trade Organization? Why 
not file a complaint? I have sent him two letters to that extent and 
have had no response.
  Beyond that, there are certainly other things he could do. A much 
braver Congress and more independent Congress years ago imposed a 
windfall profits tax on the industry and took other dramatic steps to 
help save American consumers, but they will not do that. It is the same 
thing that happened with electricity here.
  There are a favored few who I would call the contributor class. Most 
of the people who made the money here are Pioneers or Rangers for the 
President. Most of the companies that manipulated the market just 
happen to be based in Texas, and they are still profiting from these 
contracts because they will not allow your amendment.
  I mean, if anything is an illegitimate contract, if you read these 
obscene transcripts, which we could not read on the floor of the House, 
the FCC would be on top of us, of these so-called traders of Enron and 
what they were doing to manipulate and the language they were using and 
what they were doing to people, if these are not illegitimate 
contracts, extorting people illegally in

[[Page H4149]]

the Northwest and elsewhere, I do not know what is; but they will not 
allow us to debate an amendment on that issue on the floor.
  Mr. INSLEE. That is correct and the reason this is such a shame now 
is that for over 2 years we urged the administration to act. They did 
not act. There was an obvious defrauding going on, an obvious offense, 
an obvious crime. They let the embezzlement in a sense continue, and 
then told us they cannot get the money back for us. I want to make sure 
people understand this.
  First, when we asked for relief, the President and the Vice President 
said you are on your own, we are not going to help you. They said that 
for 2 years. Finally, in 2003, they said, okay, now we give up, we are 
going to offer some price caps, and they finally gave us some relief in 
2003.

                              {time}  1830

  But the horse was well out of the barn after 2 years of theft. What 
happened was they allowed that money to go to Texas. A lot of people in 
Houston bought mansions with the money we paid on the west coast, with 
money they stole from the west coast. The former Texas Governor let 
them steal it and did nothing for 2 years. Those people are now in 
Texas with money in bankruptcy that we cannot get.
  Now because of the combination of President Bush's inaction and 
failure to follow his responsibility and the bankruptcy laws, this 
money is gone. But at least we ought to be able to stop Enron from 
getting another $122 billion from Snohomish County.
  Mr. Speaker, I yield to the gentlewoman from California (Mrs. Davis) 
who has been a tremendous advocate from the very beginning trying to 
get some action by this government for California ratepayers.
  Mrs. DAVIS of California. Mr. Speaker, we did have an opportunity to 
address this issue today. We had an opportunity to say something 
happened 4 years ago that needs to be remedied today. Unfortunately, we 
did not act.
  I want to go back for a moment and talk about what our experience was 
and what happened. When energy prices spiraled out of control beginning 
4 years ago yesterday with the major blackout in California, we were 
told it was just because California had not built enough energy plants 
so there was not enough supply for the demand; but there was. Power had 
been turned off by the energy companies to create a false shortage and 
exorbitant prices. In fact, the power plants had 37 to 46 percent of 
capacity that was untapped.
  The tapes of Enron employees which were finally revealed recently 
make that abundantly clear. They said, ``There are ways you can go and 
run through the congestion process, get paid for congestion, and then 
cut your power and just collect the money.''
  But in San Diego, we have known that the market was being manipulated 
for most of the 4 years since it began.
  Workmen at Duke's Otay Mesa Energy plant revealed early on that they 
had been ordered to turn off the generators and say that maintenance 
was needed. They had been ordered to do that. Then they were told to 
destroy parts so that no maintenance could be completed and the power 
supply would continue to be turned off to create an artificial 
shortage. Yet the Federal Energy Regulatory Commission, FERC, refused 
to investigate. Their legal role was to ensure ``just and reasonable 
rates,'' but they let the rates skyrocket without action.
  Throughout that summer, we petitioned them to hold hearings and to 
put a cap on rates, but they refused to act. For over a year and a 
half, there had been details not only of Enron's manipulation, but of 
gaming by other energy companies. Reliant traders also bragged of 
shutting down much of the energy production, gloating, ``Isn't it fun 
when you can do things like that now?''
  Tapes were found of Williams employees conspiring to cut supply. I 
recall public hearings at the time where representatives of these 
energy companies denied any gaming of the market. A number of us were 
at these hearings and we were trying to push, trying to understand, and 
they denied any possible gaming of the market. With other elected 
representatives I heard the president of our local utility declare they 
were just ``passing on their costs,'' but they neglected to tell us 
that their existing lower cost contracts for natural gas to run their 
plants were not being used for the local facilities, but were being 
sold on the market at an enormous profit.
  And did FERC investigate these acts and hold the energy companies 
accountable? Members know the answer to that. No. Instead, they held 
private meetings with the power company seeking settlements out of the 
public eye for a few cents on the dollar.
  In San Diego where the rates first soared, so many people suffered. I 
remember going to local restaurants, small business owners whose ice 
cream stores could not cut back the electricity, and they had to go out 
of business. A bakery that closed, mom and pop shops with very narrow 
margins wiped out by triple energy prices. Frail, elderly people on 
fixed incomes who could not afford to run their fans or air 
conditioners when inland temperatures soared.
  And when winter came, the natural gas line coming from Texas suddenly 
cut off half the volume. Natural gas prices exploded, and folks could 
not afford to heat their homes. Museums housing precious objects, 
churches and synagogues and nonprofit agencies could not expand their 
limited budgets for this enormous line-item increase, and they could 
not just put a surcharge on the price of their services as some 
businesses chose to do. Schools and colleges had to cut supplies and 
programs. To save energy, grocery stores turned off half of their 
lights, having been told supply was the problem.
  I remember clearly we felt like we were in the dark no matter where 
we went. Our city felt under siege. Worse, the community ratepayers, 
the small businesses and families who suffered, have not received 
rebates in proportion to their losses, $9 billion in unjust charges.
  So we must not let this prevail. We must not be silent. We must 
continue to advocate and to let our voices be heard because our voices 
are the voices of our communities, and they know this was unjust and 
they know this was not reasonable; and that is why we must continue to 
speak out. That is why I am so disappointed today, and thank the 
gentleman from Washington (Mr. Inslee) for holding this Special Order 
because we could have handled this today. We could have addressed this 
issue today, and we chose not to do it.
  Mr. INSLEE. Mr. Speaker, I appreciate the gentlewoman's eloquent 
statement, but I think it is important to state that the Democrats on 
this side of the aisle, we were prevented from having this amendment 
brought up. Think about the outrage, when we want democracy in Iraq, we 
do not have democracy on the floor of the House. The House is not even 
given an opportunity to vote on an amendment to get refunds.
  To show how callous these Enron traders that the Republican Party has 
now decided to accommodate by not allowing this amendment even to be 
voted on, I want to read one transcript to let Members know what the 
Enron corporation was like. Here is a trader that says, Kevin, there 
was a guy here yesterday. He is some consultant for some ``blank'' 
other business we are supposed to be starting over. He said the guy 
came in and he said I am in California now, and my small consulting 
business, my energy costs have gone from $100 to $500 a month. It is 
unbelievable. I do not know what to do.

  The trader said, I just turned from my desk and looked at him and 
said, Move.
  Mr. Speaker, that was a very heartfelt comment, and that was Enron's 
attitude and apparently that is the Republican Party's attitude. He 
should have moved from the west coast because we are not going to do 
anything for refunds.
  The same trader continued saying, ``The best thing that could happen 
is if there was a `blank' earthquake and let that thing,'' meaning the 
west coast, ``float out to the Pacific where they can just light 
candles.''
  That is the attitude of Enron and that is the attitude of the 
majority party, apparently, that would not allow us to take action to 
do something about this travesty. California was hit, Oregon was hit, 
Washington was hit; and we are still suffering today.
  Mr. Speaker, I yield to the gentlewoman.

[[Page H4150]]

  Mrs. DAVIS of California. Mr. Speaker, it is very disappointing 
because when people deal with these issues, they are not dealing with 
it in a political context. This is not political. This is about the 
lives of people, their businesses and how they conduct themselves. When 
the public hears the kinds of statements made by those traders, they 
look to us, they look to us for help, for support. That is why it is 
important that this House which represents the people, whether 
Democrat, Republican, Independent, needs to respond; and that is why 
this was such a disappointment today.
  Mr. INSLEE. The reason we need to respond is the administration has 
not. Beginning in 2000 and 2001, we have made every concerted effort to 
get the administration to impose some type of relief, price caps or 
otherwise. They refuse to take any steps. They sat on their hands. As 
Bonnie and Clyde ran out with the bank notes, these people sat there 
and watched this theft occur and did not lift a finger for 2 years.
  Now in 2003, because they were so ashamed by what was going on, they 
finally issued some price caps. But unfortunately according to their 
commissioner, and this was on June 4, and this is amazing, talk about a 
catch-22 here, this administration's agency, the Federal Energy 
Regulatory Commission, whose job it is to protect consumers, they wrote 
me a letter. I urged them to take action to get refunds for people up 
and down the west coast.
  They wrote me a letter and told me, number one, we have concluded 
there was massive violation of the law by Enron. We have concluded that 
there was manipulation. We have concluded there was gaming of the 
system. We have concluded in essence that there was congestion caused 
to shut down access to drive the price. We have concluded there was all 
of this skullduggery and scandal. But we do not think we have the 
authority to act to get refunds back from the people who had all of 
this money embezzled before 2003.
  So here we have this administration saying we concluded there was a 
huge crime here. There was robbery, fraud, and embezzlement, and we 
know how much was taken from ratepayers; but golly gosh, we cannot do a 
thing about it.
  Mr. Speaker, we had a chance today to do something about it to make 
it the law of this land that we are going to get those refunds, and the 
majority party refused to even allow that to come up for a vote, and it 
is a double scandal. It is a scandal that would make Enron proud.
  Let me make reference to one thing, when there was a fire that shut 
down a transmission line and prevented transmission of electricity to 
California which allowed Enron to boost the rates almost a thousand 
percent, a trader said, ``Burn, baby, burn. That is a beautiful 
thing.'' That is why Enron would be very proud of the majority party 
today refusing to allow us to vote on something to get refunds for 
people. The majority party adopted the ``burn, baby, burn'' approach to 
not allow us to do anything to get these refunds.
  If there was some question, if it was kind of a close call, like 
there are close calls in baseball, was he safe, was he out, if this was 
a close call whether Enron gouged west coast ratepayers, then perhaps 
there might be an excuse; but there is no excuse here. These tapes are 
the equivalent of a videotape of the crime, DNA of their identity, 
fingerprints, and a confession after their Miranda rights; and still 
when this crime occurred, the Republican Party will not help us remedy 
this wrong. We are going to continue this effort.
  Mrs. DAVIS of California. Mr. Speaker, we had the tapes that we just 
dealt with, and there have been so many other instances along the way 
that pointed to the fact that there was outright manipulation. Talk 
about a smoking gun, we had a smoking howitzer, and people still did 
not respond.

                              {time}  1845

  Mr. INSLEE. Just to give you an example, I just want to read specific 
language of two traders. They are talking about whether to keep a 
generating plant running or not. One trader asked the operator of the 
plant from Enron, ``How hard would it be for you to turn off your plant 
and then if we want to start it up later?'' He said, ``It's not that 
hard.'' So the Enron trader said, ``If we shut it down, could you bring 
it back up in 3 or 4 hours?'' The response was, ``Oh, yeah.'' The 
response was, ``Why don't you just go ahead and shut it down if that's 
okay.'' And when they shut it down, they boosted these prices up, 
sometimes 1,000 percent.
  That type of language was found by Snohomish County in at least a 
dozen specific circumstances where Enron specifically requested energy 
to be shut down. We do not know all of them because we found out they 
were actually taking some of these calls on cell phones to try to get 
them off their recording system but we have got enough to know there 
was a clear crime here.
  Mr. Speaker, I yield to the gentleman from Washington (Mr. Baird), 
who has so ably advocated for southwest Washington, which also suffered 
in this debacle.
  Mr. BAIRD. I want to thank my friend for raising this issue and for 
his leadership on this and my friend from California as well. What I 
would like to do is do two things: First of all talk a little bit about 
the impact of this terrible practice on the people of my district and 
relate a couple of stories, and then contrast that impact with what the 
chairman of the Federal Energy Regulatory Commission said about this 
incident.
  First let me talk a little bit about schools. I visited a number of 
schools in my district during the height of this crisis and asked them 
what the impacts of these terribly increased energy rates were. These 
were the things I was told. First of all I was told of one school 
district that had scheduled to purchase new textbooks for their kids. 
These were not because they just were whimsically buying unnecessary 
books. I saw the books that they were using. These were books that were 
almost a decade old. As you can imagine after that much use, the 
binders were torn up. The books were really not serviceable, were not 
up to date. But because they could not afford to pay their energy bill, 
these school districts were having to forgo the purchases of new 
textbooks.
  In addition to that, I visited some of the classrooms. Some of the 
classrooms were functioning with only half of their lights on and the 
kids were literally told you need to wear extra sweaters and coats to 
school because we cannot afford to heat your classroom because of these 
energy rates.
  I talked to senior citizens who told me, Congressman, I am not 
necessarily going to be able to pay my rent because of the increase in 
power rates. We had utility districts that saw almost a 100 percent 
increase in power rates for residential customers. I talked to farm 
product producers, refrigeration houses, et cetera, who said they were 
almost faced with bankruptcy because the cost of operating their 
facilities had gone up so high that they were not able to make ends 
meet.
  On a much larger scale, we had an aluminum smelter that had produced 
some of the highest quality aluminum in the world that was forced to 
shut down and is in bankruptcy now and is being parted out, basically 
scrapped out. We had 700 or more workers directly affected who lost 
their jobs, their health benefits, in some cases their retirement 
benefits because electrical prices went through the roof.
  In the backdrop of that, of schools not ordering textbooks and 
turning off their lights and turning down their heat to levels that the 
kids were cold, in the backdrop of senior citizens who could not pay 
their rent, in the backdrop of small businesses and farmers who were 
forced to close their doors, in the backdrop of more than 700 jobs 
permanently lost, I want to share with you a statement by the 
individual who could have stopped this but did not. Pat Wood, the head 
of the Federal Energy Regulatory Commission, said this on March 4, 2002 
in an interview in Business Week:
  ``I view Enron's collapse as an affirmation of the efficiency of 
energy markets.'' I am going to say that again. ``I view Enron's 
collapse as an affirmation of the efficiency of energy markets,'' said 
Pat Wood.
  He continued:
  ``Here was a player who because of bad investments in noncore 
businesses, managerial shortcomings and--to be charitable--accounting 
obfuscation, became tainted and lost creditworthiness. Yet, with few 
exceptions, energy

[[Page H4151]]

customers have been able to work through those problems without any 
real significant impact.'' Let me say that again. The head of the 
Federal Energy Regulatory Commission, who refused to act when Enron was 
manipulating these prices, who was recommended by the top guns at 
Enron, said even as people throughout my district, throughout the West 
Coast were losing their jobs, losing their homes, losing their 
businesses, said, ``With few exceptions, energy customers have been 
able to work through these problems without any real significant 
impact.''
  My good friend from Washington commented earlier, and I was in the 
room with the gentleman from Washington (Mr. Inslee) when we talked to 
the Vice President of the United States. We said, Mr. Vice President, 
the economy of the West Coast is being devastated by these incredibly 
increased power rates. We said, Mr. Vice President, wholesale markets 
have gone from $30 a megawatt hour to $3,000 a megawatt hour, a 100-
fold increase. There is no justifiable mechanism that causes such a 
basic commodity as this to increase 100-fold. Everybody is complaining 
now about gas prices going over $2.50 a gallon. I share that complaint. 
But if it were a 100-fold increase in gas prices, gas prices would be 
$250 a gallon. That is the kind of price increase we sustained in 
electrical wholesale markets.
  The Vice President of the United States of America did nothing to 
stop that. The head of the Federal Energy Regulatory Commission did 
nothing to stop that. As businesses closed, our constituents lost their 
jobs and our school districts went broke, they did nothing to stop it. 
It is shameful, if not criminal.

  Mr. INSLEE. Not only did they do nothing, this House today did 
nothing while our consumers are still continuing to pay these 
outrageous electrical rates in Snohomish County, Washington, 52 percent 
today, still higher. This is the long, dark shadow of Enron that today 
we refused to do anything about. I want to go through just a moment of 
history of how this administration has and has not acted and why this 
ends up with rates being so high.
  It is interesting when President Bush was running for office in 
October 2000, when he was in San Diego and the prices were just 
starting to maybe go up, he said, ``I believe so strongly that part of 
this region is going to suffer unless you have a President who is 
willing to tell FERC to do what is right for the consumer.'' So when he 
was campaigning, he said he was going to make sure FERC did right by 
the consumers. He then took the oath of office in January 2001 and the 
next thing we heard was from Lawrence Lindsey, his assistant in the 
White House who said, ``They should expect no more help from the White 
House.'' Message from George Bush to the West Coast: Go fish. Let them 
eat cake. As a result, Enron had the green light from the President of 
the United States to go embezzle, cheat, gouge as much as they could 
from the West Coast and, by gum, Enron got the message. How do I know 
that? Here is a quote from one of the Enron traders. This is just right 
before the election. ``Matt,'' the Enron trader said, ``you know what? 
I'm scooping up every bit of `blank' power I can and take next 
summer,'' Tom said, ``because caps won't be there,'' meaning price 
caps, meaning he knew the President would do nothing about this 
problem.
  Matt responded, ``They got to come for it. I'm bound to bet huge on 
the election. When this election comes, Bush will `blank' whack that 
stuff, man.'' I am paraphrasing the expletives out. ``He won't `blank' 
play this price cap stuff. I bet they'll impose a national price cap at 
$1,000 and that's fine with me.''
  They bet and they won. The Enron traders won when George Bush was 
elected to office and when the Republicans controlled the House of 
Representatives because they have done nothing for the years 2000, 2001 
and 2002 to remedy this bleeding by our consumers.
  Just to make sure that people understand we are not kind of making 
this stuff up as we go along, I want to read about what the 
administration themselves concluded. On March 2003, the Federal Energy 
Regulatory Commission issued a final report on price manipulation in 
western markets. It found ``significant market manipulation,'' that 
``many trading strategies employed by Enron and other companies were 
undertaken in violation of antigaming provisions.'' It identified more 
than 30 entities that might have manipulated the market. But Catch-22 
from the Bush administration, we are not going to do anything about it. 
They concluded for 2 years before 2003 there was massive market 
manipulation and they refused to lift a finger to give refunds for 
people who were victimized. I could understand it if they said we are 
not sure if there was a crime here. But when the President of the 
United States' own agency concludes that billions of dollars were 
stolen from ratepayers in the western United States but they refused to 
lift a finger to get refunds, something is rotten in the State of 
Washington, D.C., and it is the influence of Enron Corporation still in 
the political process of those who still run the Federal Government. We 
have got to see some changes around here.
  Mr. BAIRD. I want to underscore exactly what you said and how 
prescient and remarkably so that the individual cited in the recording 
said, ``I'm betting on a $1,000 per megawatt cap'' because that is 
exactly the cap that was proposed. Let us put that cap into context. 
Again, the average cost before this crisis was $30 a megawatt hour. So 
the cap on $1,000 is a 30-fold increase. A 30-fold increase if applied 
to gasoline would be over $75 a gallon today. $75 a gallon. Not a 
tankful but a gallon. That is the kind of cap they were talking about. 
How remarkable. And I do not think it really is remarkable that they 
would speculate on precisely the cap that was put in.
  Let me line this trail of evidence further. The Vice President of the 
United States has claimed executive privilege and has denied this 
Congress and the American people access to the names of the people with 
whom he consulted in crafting his energy bill. How is it that Enron 
traders would so accurately predict the level of the cap that would be 
put on in the energy bill? How did they know that? And how coincidental 
that the Vice President of the United States will not give us the list 
of those names. He is consulting with the very people who are 
manipulating the energy markets at the very time they are doing the 
manipulation and he is refusing to do anything to stop that 
manipulation. And the people of the United States are being hammered 
and losing their jobs, losing their homes, losing their businesses, and 
the people who are doing the manipulation are talking to the Vice 
President about what the energy bill should contain and he is going 
along with them and he is refusing to stop them, and now is it any 
wonder he refuses to tell the American people with whom he was 
speaking.
  I want to walk through, if I may, a little bit about how this dynamic 
works. Here is the situation our local utility districts were faced 
with. Normally they could go on the spot market and buy energy in a 
shortfall for between $30 and maybe up to $60 a megawatt hour, but 
somewhere in that ballpark. But when prices spiked to $3,000 a megawatt 
hour, that is a 100-fold increase, so think about that for a second. If 
you have a commodity that goes up 100-fold, then in 4 days of purchase 
you have blown your entire annual budget. In 8 days of purchase, that 
is 2 full years of your budget. So the utilities were left with a 
Hobson's choice. I personally believe Enron, et cetera, created this 
choice for a very clear motive. What they did by letting prices spike 
to $3,000 a megawatt hour was they then had the utilities over a barrel 
and they said, ``Here, we've got a choice for you. If you don't want to 
risk that $3,000 per megawatt hour, why don't you just lock in prices 
at, say, $250 a megawatt hour,'' roughly the same level that that 
quaint trader said he would shove somewhere up some grandmother's 
anatomy. The utilities had no choice. Either you buy $250 a megawatt 
hour and lock it in for the long haul, thereby forcing your ratepayers 
to pay as much as eight times the normal going rate, or you run the 
risk of $3,000.
  So some of our utilities had no choice but to lock in these long-term 
contracts because they had to protect themselves against the risk of 
these outrageous short-term power rates. We

[[Page H4152]]

are still paying the cost of that today in Cowlitz County, a county in 
my district that saw that aluminum smelter close, saw the loss of more 
than 700 jobs, is one of the leading counties in my State in 
unemployment, or had been. It is a wonderful county with hardworking, 
decent people. Their public utility district saw 97 percent rate 
increases. The Social Security COLA runs somewhere between 2 to 4 
percent a year, depending on the year. If you are a senior citizen on a 
fixed income and you have to heat and light your home, when the Social 
Security COLA increases 2 or 3 percent but your power rate increases 97 
percent, how do you possibly make ends meet?

                              {time}  1900

  And how does Pat Wood, the head of the FERC, say most consumers have 
gotten through this without any difficulty? And, frankly, how does the 
Vice President of the United States sleep at night?
  Two questions that I hear from my constituents all the time. First, 
where is the money? Who profited from this? Where did the money go when 
these rates went through the ceiling? And the second is, why does 
someone not go to jail? People ought to go to jail for this. They 
clearly broke the law. They clearly defrauded the public. They ought to 
go to jail, and those who profited from it ought to pay back the money.
  And one final thing. I can tell them where part of the money went. 
Part of the money went into campaign contributions. Part of the money 
went into campaign tricks to help the very people who refused to 
regulate this market get reelected, and here I am sorry to say that as 
these energy markets went through the roof and were manipulated 
criminally, we received almost no assistance, virtually no help from 
our colleagues on the other side of the aisle. They said, no, we are 
going to let the market take care of itself. We are not going to 
intervene. Indeed, there was a certain condescension on their part that 
how dare we try to control these markets.
  And let me point out that regulated cost-based pricing was the model 
that worked in this country for many decades before Enron, et al. 
persuaded various governments and the administration that we ought to 
deregulate the markets, and they took advantage of that. They helped 
write the law. They then took advantage of that, and they deceived the 
public in the process, and our friends on the other side of the aisle 
were silent, in fact, blocked our efforts to try to impose regulations.
  Mr. INSLEE. Mr. Speaker, unfortunately, our friends on the other side 
of the aisle were worse than silent. They absolutely choked off any 
consideration of the Enron scandal on the floor of the House today. 
Here we have this enormous scandal breaking with the exposition of 
these tapes, and they refused to allow any Enron discussion even or 
action on the floor of the House.
  The gentleman brings up campaign contributions. It is interesting 
because so did the Enron traders. I want to read from a transcript of a 
tape of two Enron traders talking shortly before the election. The 
first one, his name was Matt. Matt was talking to Tom, and the 
transcript says: ``Tell you what. You heard this here first: When Bush 
wins--
  ``Tom: Caps are gone,'' meaning price caps, some action to keep 
prices reasonable.
  ``Matt: That `blank' Bill Richardson,'' former Secretary of Energy, 
``he's gone, and Clinton, he's gone. All those socialists are gone.
  ``Tom: Yeah.
  ``Matt: And who's the biggest single contributor to the Bush 
campaigners?
  ``Tom: You.
  ``Matt: (Laughs) Enron.
  ``Tom: Enron. What?
  ``Matt: Enron.
  ``Tom: Is it Enron?
  ``Matt: Yeah.
  ``Tom: Is that true?
  ``Matt: Yeah, I think it is.
  ``Tom: The biggest single contributor.'' Enron Corporation.
  ``Matt: Yeah, the biggest corporate contributor.
  ``Holy--really? That's huge.
  ``And that is number one.
  ``Ken Lay,'' CEO of Enron, ``is going to be the Secretary of Energy.
  ``Tom: Get out of here!''
  Tom does not have to get out of here because he got what he wanted. 
He got a compliant administration that let Enron rip off American 
citizens, Democrats, Republicans, Independents alike. They were 
bipartisan victims, and he got an administration to let them run 
rampant through the energy markets and steal billions of dollars from 
our citizens and neighbors who cannot afford it. He got what he wants. 
Now it is up to this Congress to do something to get what we want and 
what our citizens, Republicans and Democrats alike, want, which is a 
refund for the money.
  Where did this money go? It went to buy a lot of mansions in Houston 
where the President used to be Governor, where his Vice President met 
with Ken Lay, the CEO of Enron, in a secret meeting to come up with a 
secret energy plan that is no secret any longer. There is no secret 
about what happened here. Enron got what they wanted, a compliant 
administration to let them take as much as they want from consumers and 
do nothing about it. And they got a Vice President, when we laid out 
the facts to them, when it was clear as a bell that this manipulation 
was going on, they got a Vice President, and do my colleagues know what 
he said? The same months that there were brownouts in California, he 
said ``The basic problem in California was caused by Californians.'' 
Maybe he is referring to the traders in Enron. Maybe they lived in 
California. I do not know, but I do not think so because it was obvious 
what was going on here. Thirty-two percent of all the steam-generated, 
gas, coal-fired plants feeding the west coast United States had been 
turned off, and the Vice President and the President of the United 
States told victims of that skullduggery that they were not going to do 
anything about it.
  And now Congress needs to act, and we are going to continue to press 
on this because we have learned an interesting thing. We can actually 
get this administration sometimes to change behavior. For 2 years they 
refused to do anything about this. We finally shamed them into action, 
and in 2003 they finally adopted price caps that they said were going 
to ruin the U.S. economy and that this was a communist plot to have 
price caps. They finally did it in 2003 because they could not take the 
heat anymore. We are hoping this administration, when they feel enough 
heat, and our colleagues across the aisle, when they feel enough heat, 
maybe they will not see the light; but maybe they will feel the heat, 
and maybe they are going to then knuckle under and do something for the 
consumers that are owed so much. I would like a closing comment from 
the gentleman from Washington (Mr. Baird) as we close our discussion 
tonight.
  Mr. BAIRD. Mr. Speaker, I would just add to this that when 
appropriations runs around in this Congress, we often, all of us, send 
out press releases to our constituents. We help get X amount of dollars 
to come back to our district for a school or a highway or you name it. 
But I wonder why my friends on the other side of the aisle have not 
sent letters back to their constituents saying because of our inaction 
in 2000 and 2001, billions of dollars were taken from people's pockets, 
from their families, from their schools, from their businesses and 
given to large energy corporations. Because whatever they may bring 
back to their district, Mr. Speaker, they have allowed to be taken out. 
Because of their inaction, because of the inaction of this 
administration, because of their actions in allowing this deregulated 
debacle to move forward, billions of dollars have been taken out of 
hard-working Americans' pockets, put into large corporations who have 
broken the law, rewritten the law to their own advantage. It has been 
cynical. It has been destructive.
  The one final thing I would say is, and it is a little bit of a 
deviation, but there is a pattern here. It is not only a pattern 
evident in the energy bill. We saw in the Medicare bill, which was also 
written to a large degree by special corporate interests and some of 
our own colleagues who helped write that legislation are going to work 
for those special interests, to prohibit the Secretary of Health and 
Human Services from negotiating lower drug prices. When I tell this to 
my friends back home in town meetings, they sometimes do not believe 
it. They say,

[[Page H4153]]

Do you mean to tell me that the very people who benefit, who raise our 
prices on energy or on pharmaceuticals are writing the laws and 
Congress is doing nothing?
  And the sad truth is we are doing worse than nothing. We are enabling 
this.
  Mr. INSLEE. Mr. Speaker, we do not want to believe that the U.S. 
Congress would allow such a massive rip-off of Americans to take place 
and not do something. We do not want to believe that just because Ken 
Lay was so close to President Bush that the whole Federal Government 
will do nothing. We do not want to believe that massive political 
contributions could end up with the Federal Government not doing its 
job. We do not want to believe that when the Federal Government itself 
concludes that there was a crime, that there was manipulation, that 
there was gamesmanship, that there was defrauding, that there was 
embezzling, that they would do nothing. We do not believe that is the 
right thing to do, and we think ultimately we have some confidence that 
we will actually prevail on this. Even if it takes November and we get 
a new Congress that will finally take action to get a refund for 
Americans, that is the route we will go.
  I want to thank the gentleman from Washington (Mr. Baird) for joining 
me this evening.

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