updated 3/1/2005 8:49:53 PM ET 2005-03-02T01:49:53

Audio tapes made public Tuesday indicate at least 1,500 conversations in which traders employed by disgraced energy giant Enron Corp. engaged in or discussed violations of federal regulations, a Federal Energy Regulatory Commission staffer says.

Those tapes, including some collected by a Washington state utility, may have “only scratched the surface” of potentially illegal activity by Enron during the West Coast energy crunch of 2000-2001, the FERC staffer said in testimony released Tuesday.

The comment came as the regulatory agency released on its Web site transcripts of thousands of hours of taped conversations involving Enron energy traders.

The tapes contain enough information that there is “sufficient public benefit to be garnered from further review” of the transcripts, which could take thousands of man-hours to complete, said Patrick Crowley, an economist in FERC’s office of administrative litigation.

Victory for small utility
Crowley’s comment — and the release of the new transcripts — represent a victory for the Snohomish County, Wash., Public Utility District, which has pressed FERC to transcribe thousands of hours of phone conversations involving Enron traders. The utility district, based in Everett, Wash., about 30 miles north of Seattle, has spent about $200,000 to transcribe and review some of the tapes in recent months.

The utility hopes to prove that an exorbitant contract it agreed to with Enron in January 2001 should be considered fraudulent because of Enron’s manipulation, and that the utility shouldn’t have to pay the $122 million that Enron claims it owes.

Enron founder Kenneth Lay, former CEO Jeffrey Skilling and chief accounting officer Richard Causey are scheduled to be tried early next year on fraud and conspiracy charges.

Houston-based Enron filed for bankruptcy protection after an accounting scandal came to light in December 2001.

An Associated Press call, placed after business hours Tuesday, reached a guard at company headquarters who said no one was available to comment on the new disclosures until Wednesday.

New evidence
In the newly released testimony, part of an ongoing FERC civil investigation of utilities’ complaints about Enron, FERC staff cited new evidence in which Enron’s own lawyers recognized the incriminating nature of the audio tapes as early as October 2001, writing in a memorandum that, “We have already heard several conversations that should not be produced” in response to power market litigation.

Sen. Maria Cantwell, D-Wash., called FERC’s decision to review the transcripts an about-face, saying FERC staff initially tried to exclude the tapes from evidence.

“The fact this evidence almost fell through the cracks is not acceptable,” Cantwell said. “Federal regulators shouldn’t have to be embarrassed into doing their jobs. They’re supposed to be the cops on the beat, standing between consumers and the mass public mugging that took place at the hands of Enron.”

FERC spokesman Bryan Lee disputed Cantwell’s comments, saying the commission “will continue to be guided by the facts and not politics.”

A spokesman for the Snohomish Co. PUD also welcomed the release of the transcripts.

“Certainly it’s an encouraging sign in that federal regulators are taking a much closer look at some of this evidence that we’ve long held is key to our case and the plight of Western consumers as a whole,” said Snohomish spokesman Neil Neroutsos.

Crowley’s comments about scratching the surface “pertain to volume (of information contained on the tapes), rather than value,” Lee said.

“The jury is still out as to the extent these conversations provide new evidence of Enron’s activities on the Western market beyond what the commission has known about for years now,” Lee said.

Still, Lee said the newly released tapes “do put a voice to these activities. It’s a callous voice of Enron traders with a locker-room mentality in which they are gloating over the chaos which they perpetuated.”

On one of the tapes released Tuesday, an Enron trader is heard talking with an official from the city of Redding, Calif., about a procedure being put in place for congestion — in which some utilities are accused of intentionally overscheduling loads to drive up the price of energy.

The city official, identified only as “Paul,” tells Enron trader John Forney that he wants to “double check that we have something on the table for if and when congestion hits.”

John: “OK, what do you want to call this project — we have to have a catchy name for that?

Paul: “Project — ah — I was going to say project loop — but I don’t want that to go out in the world.”

John: “How about something friendly like Death Star?”

Paul (Laughter): “How about reduce the debt — debt star — because we are trying to reduce our debt here. Wherever we make money it reduces our debt.”

John: “Great — debt reduction.”

Death Star was one of several colorful names for infamous tactics used by Enron traders that helped contribute to rolling blackouts and soaring power prices in the West.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Discussion comments


Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
Cash Back Cards 17.80%
Rewards Cards 17.18%
Source: Bankrate.com