The $100,000 investment by the small Snohomish County Public Utility District paid off big, with bombshell evidence that could have been uncovered long ago – profanity-laced recordings of Enron workers gleefully conspiring to steal money from “those poor grandmothers” in California during the energy crunch of 2000-01.
The district’s lawyers and expert witnesses also have analyzed hundreds of pages of accounting sheets that document how Enron gouged Western customers for $1.1 billion during that time.
Their efforts could go a long way to requiring Enron to give up those profits, and to save people throughout the West hundreds of dollars on their energy bills. It also stole the spotlight from investigations by much bigger utilities and statewide agencies in places like California and Nevada.
“Our hats go off to Snohomish,” says Roger Berliner, an attorney for Nevada Power.
“They have done a superb job of bringing to light the most outrageous conduct imaginable by an entity that was supposed to be regulated by the federal government,” he said.
How did a public utility district with 290,000 customers nearly 2,000 miles from Enron’s Houston headquarters find itself at the forefront of such a complex legal battle, ahead of much larger utilities and state and federal regulators?
“We just happened to turn over the right rock that had this amazing trove of evidence that was not only legally explosive, but something that ordinary people could listen to and say, ‘Wow, these guys are really crooked bastards,'” said Snohomish lawyer Eric Christensen.
The story starts in the latter half of 2000, when a drought had cut into the hydropower the utility normally uses, California’s effort to deregulate its energy industry was imploding, and market prices for power were soaring.
For months, Snohomish resisted buying any more energy while it waited for the Federal Energy Regulatory Commission to cap prices or otherwise ensure that prices returned to normal.
In January 2001, it gave up, entering into a nine-year contract with Enron to buy power at $109 per megawatt hour, more than four times as much as the utility had been accustomed to paying for such contracts.
Meanwhile, Snohomish and Nevada Power, among others, are trying to convince FERC that Enron should be ordered to surrender up to $2 billion in scammed profits. But, the agencies say, FERC has done nothing about the case since it was opened last October.
So earlier this year, Nevada Power obtained and transcribed tapes of conversations between Enron traders and executives at a Nevada agency – the Colorado River Commission – in which they spoke of manipulating the power market, Berliner says. Energy traders routinely tape conversations as a way of recording oral contracts.
Snohomish followed suit, obtaining – over FERC’s objections – tapes of 2,800 hours of conversations involving Enron traders. FERC spokesman Bryan Lee says his agency opposed the request for the tapes to protect criminal investigations of Enron by the FBI and Justice Department.