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Lockyer Suit to Accuse Enron of Manipulating State Power Market

The attorney general's office says prices were rigged and ratepayers are owed billions of dollars in refunds.

June 03, 2004|Elizabeth Douglass | Times Staff Writer

California Atty. Gen. Bill Lockyer intends to file a lawsuit accusing energy trader Enron Corp. of manipulating the state's electricity market during the 2000-01 energy crisis, his office said Wednesday.

"We're going after these guys to hold them accountable for rampant gaming of the market and gouging of California ratepayers," said Tom Dresslar, a spokesman for the attorney general. He said the lawsuit would be filed in state court "in the near future."

Houston-based Enron, which collapsed in scandal and filed for U.S. Bankruptcy Court protection in December 2001, is already the subject of a Justice Department investigation that has led to charges against 29 former executives for a variety of accounting and trading schemes.

Lockyer's office has been investigating Enron and other companies that traded power on California's wholesale market. State investigators contend that electricity prices were rigged, and they hope to convince federal regulators that California ratepayers are owed $9 billion in refunds.

During the energy crisis, the wholesale cost of power soared, and the state reeled from shortages and blackouts. The high prices strained household and commercial budgets and pushed the state's largest utility into bankruptcy protection.

In his case, Lockyer intends to use evidence already submitted to federal regulators as well as a series of transcripts of routinely recorded trader conversations that have surfaced in recent months in other cases involving Enron and other energy companies.

One set of transcripts, first reported by The Times last month, includes conversations in which Enron employees boast of taking money from "Grandma Millie" in California and of "making buckets of money" through an electricity scheduling scheme nicknamed "Fat Boy."

Dresslar said Lockyer's suit would be brought under California's unfair-competition law and under a newly enacted rule that grants the attorney general authority to enforce violations of the state's securities and commodities fraud statutes.

Enron has said it is cooperating with all investigations.

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