WASHINGTON – Governmental Affairs Committee Ranking Member Joe Lieberman, D-Conn., Wednesday welcomed the Federal Energy Regulatory Commission staff’s conclusion that Enron and more than 30 other energy companies manipulated the California energy markets in 2000 and 2001 but expressed dismay at the fact that it took FERC three years to reach this conclusion. In a staff report released Wednesday, FERC staff concludes that manipulation of the Western markets included widespread use of Enron’s online trading platform, which resulted in over $500 million in profits for Enron. The report also names over 30 other companies that appear to have tried to gouge unsuspecting consumers.
“Today FERC has finally taken its first real steps towards providing redress for the rampant manipulation of the electricity and natural gas markets in California and the Western U.S. that occurred in 2000 and 2001,” Lieberman said. “It is totally unacceptable, however, that it has taken more than three years since serious problems in the California energy market first surfaced for FERC to finally reach this day. It is just astonishing to me that FERC examined Enron Online’s trading practices in the midst of these events and found, at that time, that there was no cause for concern, and that FERC investigated other trading practices as far back as the summer of 2000 and took no action against individual market participants.”
In November 2002, Lieberman chaired a Governmental Affairs Committee hearing on FERC’s oversight of the energy markets during which FERC’s examination of Enron Online was made public. That hearing, and a staff memorandum accompanying it, also showed that FERC had investigated other trading practices as far back as the summer of 2000 and, though FERC staff had found that there was the potential for market abuse, the Commission chose not even to investigate individual market participants until after Enron’s collapse, a year-and-a-half later.
“If we are going to rely on fair and open energy markets to determine how much we pay for electricity and natural gas, then we need to have more aggressive federal regulators making sure that those markets really are fair and open,” Lieberman said. “We now need to see if the Commission will follow through on the recommendations that the staff has made.”
FERC staff has recommended that changes be made in the methodology for determining refunds so that more money is returned to consumers, that trading platforms such as the one Enron used be banned, and that companies that engaged in market manipulation be forced to give up their ill-gotten profits. Staff has also recommended follow-up action against more than 30 companies.