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FERC Says Enron Unit Conducted Bogus Power Orders

November 23, 2002|From Bloomberg News

WASHINGTON — Enron Corp. used its Portland General Electric utility in Oregon to make bogus orders for power in California that helped run up costs for consumers and violated market rules, lawyers for a federal agency allege.

Enron and Portland General traders misled the operator of California's electricity market and rival companies into believing that power lines would be overloaded so Enron would be paid for relieving the congestion, according to a staff report filed Nov. 14 with the Federal Energy Regulatory Commission.

Portland General referred to the report in a filing with the Securities and Exchange Commission on Friday.

The report was filed in a case before a FERC administrative law judge, who is pursuing alleged corporate misconduct uncovered in the agency's continuing investigation of Western power markets.

It cites transactions in April and June 2000, before power prices in California surged tenfold and the state's largest utilities went billions of dollars into debt buying power. The commission has been investigating allegations of market manipulation by Enron since the Houston-based energy trader disclosed some of its methods.

The report adds detail to allegations made in August that Enron used Spokane, Wash.-based Avista Corp. as a middleman to legitimize otherwise forbidden trades.

"Traders described the trades as 'goofy' and 'screwy,' while transmission schedulers used terms such as 'bogus' and 'bizarre,' " the FERC report said, citing telephone transcripts.

"These transactions were proper," Avista spokesman Hugh Imhof said. "Nothing prohibited Enron and Portland General from trading with one another."

The commission's staff has until Dec. 20 to file charges against Avista, he said.

Portland General reported only a third of its 1,979 transactions with Enron's trading unit from 1999 to 2001, a violation of an agreement with the commission that allowed it to sell electricity at market rates, the report said.

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