Consumer Group Calls Energy Regulator’s Response to Enron Tapes Appalling

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FERC Chairman Was Twice Appointed By Bush At Ken Lay’s Request

Santa Monica, CA — The Foundation for Taxpayer and Consumer Rights (FTCR) chastised Federal Energy Regulatory Commission (FERC) Chairman Pat Wood, III for statements he has made regarding the recently revealed Enron tapes. After reviewing a letter from Chairman Wood to Senator Boxer, the California-based group expressed outrage at Wood’s dismissive response to the lurid tapes of Enron employees describing their manipulation of the California energy market during that state’s deregulation crisis.

FTCR is “appalled by your indifference to both already established facts surrounding Enron‘s gaming of California ratepayers and to the suffering of Californians due to market manipulation perpetrated by companies that you regulate,” the group wrote in a letter sent to Wood today.

Read FTCR’s letter

In his letter to Senator Boxer, Wood claimed that there was no relationship between market manipulation and $40 billion worth of excessively priced energy contracts signed by California at the height of the 2001 energy crisis. He stated:

the Commission found no evidence that there was market manipulation specific to the long-term contract negotiations and no evidence of unfairness, bad faith or duress in the negotiations of the long-term contracts. [emphasis in original]

Read the text of FERC Chairman Wood’s letter to Senator Boxer .

FTCR points out that not only does this assertion ignore the extraordinary evidence provided by the Enron tapes, but it also directly contradicts his own agency’s prior findings (in its March 26, 2003 “Final Report on Price Manipulation in Western Markets”). In that report, FERC found that the manipulated market prices directly impacted California’s long-term contracts.

Wood also claimed that FERC has provided significant assistance to California in the previously settled and on-going battles for energy company refunds. The Foundation for Taxpayer and Consumer Rights called his assessment a “rewriting of history,” noting that “your agency has set up roadblocks every step of the way.”

FTCR wrote that Wood was more empathetic for the “discredited positions of Ken Lay” than of Californian. The group noted that Wood was first appointed to the Texas Public Utilities Commission by then-Governor Bush at the request of Enron‘s Chairman and CEO Ken Lay due to his strong support for energy deregulation. Ken Lay later urged President Bush to move Wood to FERC.

“Although you do not attempt to defend these indefensible tapes, your effort to deflect their relevance in this manner demonstrates your continued allegiance to your long-time promoter Ken Lay. But more importantly, your letter shows that you do not grasp the heinousness of this massive larceny,” FTCR wrote. “There is no excuse for your unwillingness to confront the abhorrent economic crimes that gave way to the deregulation disaster of 2000 and 2001. It is time that you stand up for consumers.”

The Enron tapes, recently revealed by CBS News, explain how unregulated energy companies manufactured shortages in the California market during the crisis of 2000 and 2001. These tapes are only the most recent in a spate of documents, recordings and pleadings that prove that, using deregulation, energy companies gouged California ratepayers and taxpayers and foisted unjust and unreasonable long-term energy contracts onto the state.

According to FTCR, even after three years of bearing the excessive prices of these contracts, the long-term deals signed by California’s former Governor Gray Davis still leave the state’s consumers with at least $7.38 billion in excessive rates to be paid over the next decade. This amount does not include the billions of dollars above market prices that Californians have already paid on these contracts since 2001. Nor does it include the minimally $9 billion in energy company refunds owed to California to compensate ratepayers and taxpayers for excessive prices paid during the crisis itself. To date, ratepayers have received less than $2 billion — none as a result of FERC ordered refunds — through settlements with the private energy companies.

FTCR’s letter to Wood is available at


Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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