Enron Notes Spark a Renewed Call for Refunds

California Atty. Gen. Bill Lockyer renewed efforts Thursday to have federal regulators order $1.5billion in electricity refunds to consumers, citing new Enron Corp. documents that he said prove manipulation of electricity markets in California and the Pacific Northwest.

The documents, including handwritten notes of meetings between Enron traders and lawyers, shed light on the rough world of energy trading and Enron’s bare-knuckled strategies to combat investigations of its market activities.

“These new Enron documents ... further indicate that Enron and perhaps numerous other suppliers engaged in attempts to manipulate the electricity markets in the western United States” since at least June 2000, Lockyer said in a petition filed late Wednesday with the Federal Energy Regulatory Commission.

Lockyer asked the commission to reopen the proceedings in which California and Tacoma, Wash., asked FERC last year to grant $1.5billion in refunds because prices charged in spot markets in the Pacific Northwest were “unjust and unreasonable” from Dec. 25, 2000, to June 20, 2001. In June 2001, FERC instituted price caps for several Western states.

A FERC administrative law judge reviewed the available evidence last year and ruled in October that those spot markets were competitive. FERC has not yet acted on the refund request or on a separate request for nearly $9 billion in refunds from California for alleged overcharges in the state’s own power markets.

The Enron documents released Thursday, along with another batch given to congressional committees, provide a unique window on Enron’s trading business in late 2000 and early 2001, when California’s electricity crisis was intensifying and investigations of market manipulation were heating up.

Some of the documents are working notes from meetings in October 2000 in which Enron traders educated their lawyers about several strategies that the company was using in California to boost profit. The tactics included playing markets off each other, creating phony congestion on electricity transmission lines and submitting inflated estimates of electricity needs only to cut electricity requests at the last minute.

Those meetings led to two key memos from Enron lawyers detailing the strategies by such names as Death Star, Fat Boy and Get Shorty and admitting that Enron traders may have contributed to a power shortage on Dec. 5, 2000.

The handwritten notes offer tantalizing fragments of conversations with traders.

“We made so much money,” said one entry. “Schemes=$10m total,” said another.

“We weren’t causing the congestion--just increasing,” the notes said of one technique. Of another strategy, the notes indicate that buyers of transmission were able to save money so Enron “could argue net societal benefit.”

The meeting notes show Enron’s eagerness to deflect blame to other market participants. For example, the documents said, “Show the Powerex/Williams--hogs at trough.” Both Powerex Corp., the marketing arm of British Columbia’s provincial utility, and Williams Cos. of Tulsa, Okla., have denied manipulating prices or supplies.

Power plant owners and other electricity sellers have steadfastly denied that they caused California’s energy crisis of 2000 and 2001.

The lawyers who wrote or received the memos testified Wednesday before a Senate panel that they moved quickly to end the trading practices when they learned about them in late 2000 and treated the matter so seriously that at one point they removed all shredding machines from the trading operations to preserve documents.

But Michael Aguirre, a San Diego lawyer who filed a class-action lawsuit against power generators in November 2000, said a detailed bill included in the documents that was submitted by Stoel Rives, which employed one of the lawyers who wrote a key memo, depicts lawyers actively engaged in helping Enron continue its trading practices and avoid detection.

Aguirre points to dates such as Sept. 27, 2000, when Stephen Hall, the lawyer who wrote the crucial Dec. 6 trading memo, spent some of his time in a conference call with the sanctions committee of the California Power Exchange, and Oct. 5, 2000, when Hall reviewed an Enron draft petition to FERC protesting a plan to extend price caps.

“What the memos demonstrate is that lawyers were helping to manage the illegal activities on a day-by-day, minute-by-minute basis,” Aguirre said.

Energy consultant Robert McCullough said the documents also are significant for what is not there: actual working records from Enron’s trading floor, such as details of power deals or operational memos.

“What I would like to see is the risk management analysis on May 1, 2000,” just before electricity prices first spiked in California markets, McCullough said.

Times staff writer Nancy Vogel contributed to this report.