Senators hear from Enron on PUD issue

WASHINGTON — While Enron's embattled founder Kenneth Lay was making his arguments in his criminal trial in a Houston courtroom last week, Enron's lobbyists were making their own case against the Snohomish County Public Utility District (PUD) on Capitol Hill.

Enron's creditors want a group of key senators, including Larry Craig, R-Idaho, to back off their recent support for the PUD in its fight against the bankrupt energy company over inflated electricity rates during the West Coast energy crisis of 2001 and 2002.

The maneuvers on Capitol Hill may signal the beginning of the end in a four-year war involving the PUD, the scandal-ridden energy corporation and federal regulators deciding their dispute.

Enron has asked Snohomish PUD to pay roughly $120 million in contract-cancellation fees. In addition, the company wants to remit PUD ratepayers only 22 cents on the dollar for $40 million in overcharges that the PUD claims were caused by Enron's market manipulation.

If Enron's creditors win, Snohomish residents could face a 25 percent increase in their electricity rates for one year, according to PUD lawyer statements.

Ten senators, including Craig and three other Republicans, recently wrote the Federal Energy Regulatory Commission (FERC) to oppose any settlement that includes these terms: "We ... believe terms of the proposed settlement may jeopardize the ability of a number of Western businesses and utilities to get relief from Enron's attempts to collect profits associated with power the bankrupt energy company never even delivered."

Their April 19 letter carries no legal weight but puts political pressure on Enron and on FERC.

And it could land on the agenda of one Washington state Republican who has recently been nominated to a vacancy at FERC: Phil Moeller. Moeller was an aide to former Republican Sen. Slade Gorton.

It could be an awkward issue for Moeller because Lay recommended him for FERC in early 2001 in a letter to the George W. Bush transition team, and also because Sen. Maria Cantwell has already made Enron an issue in her re-election campaign.

Today Cantwell, a Democrat, will file a formal request with FERC and the Justice Department, through the Freedom of Information Act, to open a sealed evidence file containing hundreds of hours of unreleased tape recordings of Enron officials.

The government has already paid about $800,000 to transcribe the tapes. However, FERC staff members' proposed settlement would preclude Snohomish PUD from revealing their contents.

Cantwell's letter reads, "We believe additional audiotapes, documents and e-mails related to Enron's market manipulation schemes may be of substantial value in crafting federal policies related to the kind of speculative financial trading in energy commodities."

Craig, the Idaho senator, agrees. "The American public deserves to know the facts about the depths to which Enron stooped to pick the pockets of energy ratepayers," said the April 19 letter he co-signed.

Last week, lawyers from Enron's firm of LeBoeuf, Lamb, Greene & MacRae asked Craig and other senators for meetings to discuss their April letter.

"It appeared to us that there was a misunderstanding by these senators on where money was coming from and going to, and we felt obliged to inform them about that," said attorney Charles A. Moore, who added, "Enron gets people's hackles up."

In filing an objection to the Senate letter with FERC last week, the law firm said the Snohomish PUD "clearly intends to continue litigation to evade its contractual obligations" to Enron.

Craig's office has not yet set up a meeting with Enron's lawyers.

But Craig aide Dan Whiting said, "Senator Craig is standing firm in his commitment that he made in that letter."

Cantwell's GOP opponent, Mike McGavick, said he was disturbed by Enron's recent outreach to the Senate.

"Enron continues its efforts to be the most disgusting company in America. I encourage those senators to stand firm."

Alicia Mundy: 202-662-7457 or amundy@seattletimes.com