Sunday, Jul 20, 2008
Western Democrats demand answers during a Senate hearing.
Jan 30, 2002 | The list of possible sins grew Tuesday for embattled Enron Corp., when a tag team of female Democratic senators from the West exacted a promise from the chairman of the Federal Energy Regulatory Commission to investigate whether Enron artificially inflated West Coast energy prices.
The Senate Energy and Natural Resources Committee hearing, chaired by the low-key, heavy-browed Sen. Jeff Bingaman, D-N.M., purportedly was to tackle the issue of how Enron's bankruptcy affected the energy markets. But Sens. Dianne Feinstein, D-Calif., and Maria Cantwell, D-Wash., were the only two senators -- with the exception of Bingaman -- who stayed until the end of the three-hour hearing. And they took it in their own direction, no doubt with their constituents in mind.
They pressed Pat Wood III, the 39-year-old Texan who was Enron CEO Ken Lay's preference to head FERC, to take anecdotal information they presented and investigate further to see if their suspicions of Enron price-rigging were warranted.
Republicans didn't seem all that interested in giving the hearing any credence. The committee's ranking Republican, Sen. Frank Murkowski, R-Alaska, came to the hearing apparently just to discredit it.
"It appears that politics in both the House and Senate are trying to create a political issue out of Enron's failure," Murkowski said.
Murkowski went on to pooh-pooh accusations that much of the Bush administration's energy plan was dictated by Enron. He also argued that many elements of the energy policy of Senate Majority Leader Tom Daschle, D-S.D., "are straight out of the Enron playbook."
"Those that live in glass houses should not throw stones," Murkowski said, then oddly adding, "or those who live in glass houses perhaps shouldn't take baths." When he finished railing, Murkowski left.
The hearing's stated purpose was to make sure that all was fine and well with the energy markets, which most of those testifying seemed to think was the case. "Energy markets are what saved the country from the collapse of this company being so dramatic," Wood said. "For it to have been digested so efficiently through the market is quite a testimony to the efficiency of the markets."
But that was not going to prevent a Left Coast Enron-bashing. The dots, according to Feinstein and Cantwell, seem to justify some connecting. They consist of:
Dot 1: Feinstein reported that Enron controlled 50 to 70 percent of the trading market for natural gas deliveries into Southern California from May 2000 to June 2001, and it did so through bilateral sales, which require no public disclosure of their details.
Dot 2: Natural gas prices drive electricity prices, and California energy prices went through the roof, from $7 billion in 1999 to $28 billion in 2000 and $27.7 billion in 2001.
Dot 3: At the end of 2000, the price of natural gas delivered to the border of Southern California was $59.12 a decatherm. In the New Mexico coal town of San Juan -- just an Arizona away from the California border -- the price was $10.12 a decatherm.
"We know that it costs less than a dollar to deliver the gas from San Juan to the California border," Feinstein said, so around that time "there was $48 a decatherm unaccounted for." Where did these inflated prices come from? Was it Enron?
"Today's gas price averages $1.91 for most of the country, and $2.05 for California," Feinstein said. "So, there's a lot of money unaccounted for, while at the same time Enron and other energy marketers are announcing record profits during that quarter."
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