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Williams Cos. Energy Trading May Be Probed

Power: The company denies an allegation by a former employee that it manipulated the market to drive up prices.

June 03, 2002|From Bloomberg News

TULSA, Okla. — Williams Cos., owner of the second-largest network of interstate natural-gas pipelines, may be investigated on allegations it tried to corner California's natural-gas market during last year's energy crisis.

Former Williams employee Jones Murphy told the New York Times the company's director of risk management, Blake Herndon, said to him in a conversation in December 2000 that Williams' traders were "going to corner the market and run it up for December closing, which means delivery in January."

Williams said the article in Sunday's edition of the paper "erroneously" states its strategy. "The notion would be funny if it wasn't such a serious thing to say," said Jim Gipson, a Williams spokesman.

The Federal Energy Regulatory Commission is investigating possible manipulation of California's energy markets in 2000 and 2001. FERC has asked energy traders, including Williams, if they engaged in questionable practices detailed in memos it acquired from energy trader Enron Corp., which has filed for bankruptcy protection.

It also questioned companies about "wash trades," in which energy is bought and sold at the same price to increase trading volumes and revenues. Williams has denied it engaged in this practice.

"I think the governor will ask FERC to investigate this as well as part of its investigation of manipulation of the California power market," Steve Maviglio, a spokesman for Gov. Gray Davis, said of the claims in the newspaper report.

"It's one more piece of evidence that FERC needs to refund the $8.9 billion we're owed," Maviglio said. California wants FERC to order the refund because it says it was overcharged during the power crisis.

Murphy told Bloomberg News he stands behind his comments in the article. He said he was fired by Williams after he refused to accept a demotion.

"If they didn't drive the price of gas up, it would show up in their trading records," Murphy said. "It would be very easy for them to show they didn't make huge profits by showing those records."

Williams said last week that it plans to sell as much as $1.5 billion in stock in the next year and $3 billion in assets to raise cash and reduce debt.

The company, whose stock has fallen 64% in the last year, wants to convince investors it won't collapse like Enron.

Shares of Tulsa, Okla.-based Williams rose 20 cents to $14.20 Friday on the New York Stock Exchange.

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