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Fed probe into wholesale power, natural gas markets
Federal regulators in Washington ordered a nationwide investigation into wholesale power and natural gas markets Wednesday, focusing on whether manipulation by Enron or other energy traders caused soaring price in the West a year ago.
Federal regulators in Washington ordered a nationwide investigation into wholesale power and natural gas markets Wednesday, focusing on whether manipulation by Enron or other energy traders caused soaring price in the West a year ago.
Pat Wood, chairman of the Federal Energy Regulatory Commission, said the agency would conduct ``a full-bore investigation’’ of both physical energy transactions and financial trades such as those dominated by Enron’s online trading division before the company sank toward bankruptcy.
Wood said in an interview said that the investigation could take as long as six months and, while focusing on trading activities of Enron, would include wholesale gas and power trades of other energy companies as well.
After the findings, the commission will decide whether to start a second round of investigations into whether to require changes in long-term power contracts ``whose prices may have been influence by any inappropriate Enron activities,’’ said Wood. Several Western senators have demanded that the agency pursue evidence of possible market manipulation by Enron after hearing testimony from an energy consultant that the price of some long-term power contracts, known as ``forward contracts,’’ dropped dramatically in the week after Enron filed for bankruptcy in December.
But Sen Maria Cantwell of Washington said she was disappointed that the commission was not moving more quickly into a formal investigation into whether some of the high-priced power contracts negotiated in the West were entered into improperly and should be reworked.
Both in California and the Pacific Northwest, utilities entered into long-term power contracts that many of the utility and state officials now think might have been driven up because of manipulation by Enron and other independent power marketers and suppliers. Based on these allegations, the commission has begun an investigation ``of whether there was actually some manipulation’’ of power or natural gas markets by Enron or any of its affiliate companies, Wood said.
According to a newly released e-mail from Enron`s former accounting firm, Enron `s interest in expanding its political influence extended to a little-known group that sets international accounting standards.
The embattled Houston energy trader, approached early last year about contributing $500,000 over five years to the London-based International Accounting Standards Board, wanted to know what kind of "formal or informal access to the process" it would buy, according to the e-mail by David Duncan, then a partner at Arthur Andersen LLP, Enron`s auditor.
Bureau Report
Wood said in an interview said that the investigation could take as long as six months and, while focusing on trading activities of Enron, would include wholesale gas and power trades of other energy companies as well.
After the findings, the commission will decide whether to start a second round of investigations into whether to require changes in long-term power contracts ``whose prices may have been influence by any inappropriate Enron activities,’’ said Wood. Several Western senators have demanded that the agency pursue evidence of possible market manipulation by Enron after hearing testimony from an energy consultant that the price of some long-term power contracts, known as ``forward contracts,’’ dropped dramatically in the week after Enron filed for bankruptcy in December.
But Sen Maria Cantwell of Washington said she was disappointed that the commission was not moving more quickly into a formal investigation into whether some of the high-priced power contracts negotiated in the West were entered into improperly and should be reworked.
Both in California and the Pacific Northwest, utilities entered into long-term power contracts that many of the utility and state officials now think might have been driven up because of manipulation by Enron and other independent power marketers and suppliers. Based on these allegations, the commission has begun an investigation ``of whether there was actually some manipulation’’ of power or natural gas markets by Enron or any of its affiliate companies, Wood said.
According to a newly released e-mail from Enron`s former accounting firm, Enron `s interest in expanding its political influence extended to a little-known group that sets international accounting standards.
The embattled Houston energy trader, approached early last year about contributing $500,000 over five years to the London-based International Accounting Standards Board, wanted to know what kind of "formal or informal access to the process" it would buy, according to the e-mail by David Duncan, then a partner at Arthur Andersen LLP, Enron`s auditor.
Bureau Report