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Tapes Reveal Enron's Power Plant Rigging

Transcripts detail how electricity traders conspired to shut down smooth-running generating facilities during the energy crisis.

February 04, 2005|Jonathan Peterson | Times Staff Writer

As part of its case against Enron, the Washington utility found a May 6, 1998, Enron memo referring to a "PHONY import," another tactic for taking advantage of the energy market. The memo noted that the independent system operator "will call and tell us we're out of balance, so tell them we intend to correct the imbalance in the 'hour-ahead' market. In fact, we really intend to do NOTHING.... "

In response to the disclosure, Cal-ISO officials said Thursday that such tactics would no longer be possible because of reforms that have been implemented since 2002. "There are many practices in place to prevent that type of phony import from happening today," McCorkle said.

Suggestions that Enron's plans to exploit the energy marketplace as much as three years before the 2000-01 energy crisis jarred some officials, who recalled how Enron executives were traveling the country about the same time making a case to deregulate the marketplace.

"Enron put out the most polished presentations, the glossy materials, the things they put out to every policymaker in the West," said Eric Saltmarsh, executive director of California's Electricity Oversight Board.

"To know that it was basically a scam as far back as that says it wasn't just a fraud on the marketplace in 2000 and 2001, it was really a fraudulent ambition in creating what became of the California marketplace," Saltmarsh said. "In that sense, the [marketplace deregulation] was in some respects set up to fail."

In one scheme that Enron dubbed "Project Stanley," company traders were accused of market manipulation in Canada. Canadian officials in 2000 cleared Enron and Powerex Corp., the marketing arm of British Columbia's utility, of bid-rigging charges.

Nonetheless, in an Aug. 4, 2000, conversation, Enron trading executives John Lavorato and Tim Belden discussed the dispute involving traders who worked for Lavorato. The two Enron executives appeared to doubt the project's legitimacy.

Lavorato: "I'm just, ah [expletive] I'm just trying to be an honest camper, so I only go to jail once."

Belden: "Well, there you go. At least in only one country. (Laughs.)"

Lavorato: "Yeah, [expletive] this isn't a joke.... Nobody else seems to be concerned anymore."

Lavorato's lawyer said he was unfamiliar with the conversation and couldn't comment. A lawyer for Belden -- one of three Enron traders to plead guilty to fraud charges related to California market manipulation -- couldn't be reached late Thursday.

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(BEGIN TEXT OF INFOBOX)

Enron evidence

Newly released transcripts of taped conversations between Enron traders and others show the Houston energy companyÕs attempts to profit during CaliforniaÕs 2000-01 energy crisis by turning off a power plant and other actions, utility officials said.

Transcript 525 An Enron employee identified only as ÒBillÓ tells ÒRichÓ of Las Vegas Cogeneration to find a reason to shut down the power plant on Jan. 17, 2001. (transcript not shown here; see graphic)

Transcript 552 Undated conversation in which Enron employees discuss pressure to falsify the accounting for Western trading.

Enron employee: I don't want to, ah, open up another old wound or something, but, ah, what was his problem?

Matt Goering: É I mean, dude, he, he was just out of control.É And he constantly, constantly wanted to cook the [expletive] book.É I would tell him É that's not right.É But, he was like, no, you're an idiot.É I might get fired for marking the book correctly, but I'll go to jail for cooking it.

Transcript 221 An Aug. 4, 2000, conversation in which Enron trading executives Tim Belden and John Lavorato discuss charges that LavoratoÕs underlings in Canada conspired to inflate electricity prices in 1999.

Lavorato: I'm just, ah [expletive] I'm just trying to be an honest camper, so I only go to jail once.

Belden: Well, there you go. At least only in one country. (Laughs)

Lavorato: Yeah, [expletive] this isn't a joke. I'm a little Ñ nobody else seems to be concerned anymore about it, except for me.

Source: Snohomish County Public Utility District

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