FERC May Go After Enron Profits

U.S. Federal regulators may seek to recover as much as $1.9 billion on behalf of Western power customers in the Enron Corp. bankruptcy case.

Federal Energy Regulatory Commission staff, who have been examining the trading schemes Enron employed in the West, contend the once-mighty energy giant should be forced to relinquish all profits earned in that region between January 1997 and June 2003.

"Enron's extensive fraudulent activity justifies disgorgement of all its Western-market-based profits," agency staff member Craig Deters testified recently.

During that six-year period, Enron Power Marketing and Enron Energy Services racked up profits of anywhere from $1.68 billion to $1.87 billion, calculates Randolph Barlow, a financial analyst at the agency.

Asked about the staff's analyses Monday, Jennifer Lowney, a spokeswoman for Enron, said, "We're aware the testimony has been filed, and we're currently reviewing it."

Last summer, the commission ordered Enron to cough up $32.5 million in profits after learning the company had tried to manipulate the power market by failing to disclose a business relationship with El Paso Electric Co. starting in January 1997.

At times, Enron operated El Paso's power marketing desk and had control over the availability and price of El Paso's wholesale electric power.

But the commission didn't stop with the Enron-El Paso relationship. Instead, the agency ordered a more comprehensive look at Enron's behavior in the Western markets.

Officials in the Western states have long argued the antics of Enron's Western power trading desk exacerbated an electricity crisis in 2000 and 2001 that sent blackouts rolling across California. And they've been clamoring for compensation.

"The writing's on the wall," Sen. Maria Cantwell, D-Wash., said Monday. "Now the commission needs to act to make sure that the same consumers who have already paid the price for Enron's manipulation schemes won't have to pay yet again."

A FERC administrative law judge is scheduled to hold a hearing on the Enron matter in June and then issue an initial opinion in October. The full commission would then have to take up the matter.

But Enron's assets are controlled by the U.S. bankruptcy court. If the commission were to decide to try to recover the profits, the agency would have to line up with other creditors in the bankruptcy case.

Assuming the agency met all the legal requirements for pursuing a claim in the bankruptcy proceedings, the agency would likely join the mass of unsecured creditors in the case, said Martin Bienenstock, the company's lead bankruptcy lawyer.

The bankruptcy court is to begin dispersing payments in June. Creditors are receiving only a fraction of what they're owed, between 18 cents and 22 cents on the dollar.