Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

July 12, 2004

The Honorable Patrick Henry Wood III
Federal Energy Regulatory Commission
888 First Street NE
Washington, D.C. 20426

Dear Chairman Wood:

I am writing to urge the Federal Energy Regulatory Commission (FERC) to take immediate action to protect the rights of utilities and their rate payers who have been severely impacted by the fraudulent activities of Enron. I am concerned that if FERC fails to act promptly, it stands to lose its ability to enforce its authority over Enron’s practices and negate any efforts to right the wrongs perpetrated on consumers in Washington and other western states. I am particularly concerned by FERC’s failure to take any action to protect its authority in the Enron bankruptcy proceeding. That proceeding will terminate the existence of Enron Power Marketing, Inc. (EPMI) and all other Enron debtor entities and may compromise any subsequent orders FERC may issue for refunds, disgorgement or penalties.

As the chief law enforcement officer of the state, an active participant in FERC dockets pertaining to the western energy crisis of 2000-2001, and the state’s advocate for utility consumers, I am extremely disappointed that three years have passed without FERC providing any meaningful relief to Washington’s utility customers who were harmed by Enron’s egregious and blatant activities.

At the beginning of the crisis, policymakers throughout the west asked FERC to take immediate and aggressive action to stem the enormous tide of rising electricity prices. Unfortunately, FERC was slow to react even in the face of compelling evidence. A number of FERC decisions, many currently on appeal, refused to void outrageous contracts, or to take back illegal profits through disgorgement, or to provide any real opportunity for remedies on behalf of customers. To this day, FERC continues to slowly, and in my view incompletely, proceed against Enron.

The recent disclosure of tapes and trading transactions has confirmed beyond any doubt that Enron was not only involved in fraudulent and deceptive practices in the electricity markets, but that it created many of them and was actively developing new ways to defraud consumers. These practices severely harmed consumers in Washington and the other western states. I understand that the tapes released thus far are only a fraction of the evidence of wrongdoing by Enron employees.

The ongoing delay in examining all of the evidence of fraud and blatant market manipulation serves only to insulate Enron from full accountability and responsibility for its actions. In the meantime, FERC’s failure to act to protect the integrity of its process and authority in the context of the Enron bankruptcy now risks making any orders it may issue in the future unenforceable and meaningless. With Enron’s submission of a plan of reorganization to the bankruptcy court, the door is closing on any meaningful relief from Enron for these fraudulent activities. That plan may eliminate the ability of utilities and their rate payers to obtain any relief from FERC for the terrible wrongs inflicted upon them by Enron. Under the current plan provisions as I understand it, all Enron debtor companies will be dissolved and all debts not provided for in the plan will be discharged, including any pending before FERC. That means that any orders for refunds, disgorgement or penalties that FERC issues, absent a proof of claim, will be worth no more than the paper they are printed on, and that will provide scant comfort to the parties looking to FERC for real relief from real harm.

My office has also filed a Freedom of Information Act (FOIA) request with your agency, as well as with the U.S. Department of Justice. These requests seek the public release of the rest of the trader tapes that clearly show how cavalierly Enron’s traders defrauded consumers and contributed to the western energy crisis. I urge you to take prompt action regarding this request. Three years is far too long for that information to be kept secret. There can be no honest or legitimate reason to protect this evidence of Enron’s despicable and illegal business practices. On behalf of Washington's consumers I have filed a claim in the Enron bankruptcy, as California and Oregon have done for their consumers. Disclosure of documents and records relevant to Enron activities will be essential in the prosecution of our claims.

It is imperative that FERC take prompt and aggressive enforcement action. Therefore, I urge FERC to immediately take up the evidence made public by SnoPUD, the additional evidence in the possession of the Department of Justice, and the evidence that FERC already has scattered throughout various FERC dockets, and use that as the basis for providing Washington and other western consumers with just and reasonable relief.

Finally, while we understand the desire of many to move on from the events of the past and focus on the very real and challenging issues facing the electricity industry today, FERC cannot simply abandon its responsibility to act in the public interest regarding Enron. Enron must not be allowed to complete this bankruptcy without real accountability for its outrageous actions. I look forward to your prompt and forceful action.


Attorney General