Manipulations Of Enron
Mr. Speaker, I came tonight to the floor of the House to address an outrage, perhaps the largest fraudulent activity in American history which has resulted in literally billions of dollars being stolen from American ratepayers for…
Mr. Speaker, I came tonight to the floor of the House to address an outrage, perhaps the largest fraudulent activity in American history which has resulted in literally billions of dollars being stolen from American ratepayers for electricity in the western United States. And this, of course, is the outright theft from West Coast ratepayers by the Enron Corporation. And I have come to the floor tonight because, unfortunately, the energy bill that passed this Chamber today did absolutely nothing whatsoever to restore one ounce of justice for the consumers on the West Coast who were so grievously ripped off by the Enron Corporation.
Mr. Speaker, the sad fact is that today the House of Representatives had an opportunity to do something about an outrage that has not been remedied now despite our efforts for the last 3 years. Because the sad fact is that the Enron Corporation and others manipulated with unfortunately great effect the energy market in the West Coast starting in 2000. This manipulation resulted in West Coast ratepayers paying conservatively in the billions of dollars of overcharges to Enron and other energy traders. And the law of the United States as written is designed to prevent that and does prevent that if we had a cop on the beat to enforce the laws. But, unfortunately, what happened in the years 2000 and 2001 is that Enron found a way to gain the system. They found a way to essentially shut off generating capacity for the western coast of the United States and, as a result, drive up the prices dramatically, and they were unfortunately successful in this outrageous conduct. In fact, rates being paid by utilities, and therefore ratepayers in the western United States went up by a factor of a thousand percent, sometimes on a daily basis. And Enron was successful in doing this because they decided not to follow the law. And, unfortunately, they had some allies in not following the law, and that was this Federal Government, which did not enforce the law of the United States and allowed Enron to foist billions of dollars of overcharges on the ratepayers on the West Coast.
Now, just to put a sense on how grievous this is, in Snohomish County, Washington, in the northern Puget Sound area, an area which I represent, ratepayers are still paying today half as much more than they should be paying, 52 percent more than they should be paying for electricity due to the depredation, the rapaciousness of the Enron Corporation.
This is now over a billion dollars in the State of Washington of overcharges that ratepayers are still paying today. And we believe, at least on my side of the aisle, that the Federal Government should take action to get refunds back from the Enron Corporation as a result of these wrongful activities.
Unfortunately, today, the Republicans refused to allow an amendment to be even voted on in this Chamber to get that money back for ratepayers on the West Coast. It would have been a simple amendment. I offered it in conjunction with the gentleman from California (Mr. Filner) and the gentleman from Oregon (Mr. DeFazio), that would have required that refunds would have been given to these ratepayers going back to the year 2000. But unfortunately the majority party decided to side with Enron, the bankrupted corporation, bankrupt both fiscally and morally. They sided with Enron rather than with consumers and stood against giving consumers the refunds that they are owing.
This is outrageous, and I know it is outrageous because the offenses of which I speak are not hypothetical. We have very clear evidence of what Enron did, and that evidence has been disclosed by very vigorous, assertive, and healthfully combative Public Utility District in Snohomish County PD, in Snohomish County, Washington, because what they did was they forced the disclosure of audio tapes that these Enron traders had kept of their conversations when they came up with their nefarious deals.
The Bush administration and their Federal Energy Regulatory Commission did not want the public to hear these tapes. They did not want the public to have access to the gamesmanship that went on that cost consumers so many millions of dollars, but Snohomish County PD was very energetic in getting these tapes released. Now they have come forward, and what is on these tapes would shock even the saltiest of sailors, not only because of the language that was used but because of the immoral, unethical conduct where these traders basically sacrificed willingly the ratepayers in order to juice out another million dollars or so a day for the Enron Corporation.
I would like to go over some of these, and we have deleted the expletives that were unfortunately frequently in their conversations, but we are trying to keep the gist of their conversation, and I am just going to refer to some of them here. These are audio tapes transcripted by Snohomish County Public Utility District of traders for Enron Corporation talking to one another.
First trader: So the rumor is true that they are taking all the blank money back from you guys, all that money you stole from those poor grandmothers in California?
Response: Yeah, Grandma Millie, and she is the one who could not figure out how to blank vote on the butterfly vote.
Response: Now she wants her blank money back for all the power you jammed her for, for $250 per megawatt hour.
That is a conversation between Enron traders.
Now, when they talk about jamming Grandma Millie, what they mean by this is they have constricted the supply down, going to the California ratepayers and Washington for that matter and, therefore, boosted the price up, in this case to $250 a megawatt hour, in many cases up to $1,000 a megawatt hour, 10 times what was the previously going rate.
Now this type of conservation was repeated over and over and over again by these traders.
Second example. The Enron traders discovered a handy little technique. They found a way to congest transmission lines so that when they were congested, energy could not get through. So they would willfully schedule transmissions in a way that would prevent transmission from occurring, and when that happened, the price skyrocketed because of the existing demand. So here is a conversation here. They are talking about the congestion.
Then the other trader states: If the line's not congested, I just look to congest it. If you can congest it, that is a money maker, no matter what.
And it was a money maker, because when they congested these lines, the price skyrocketed, sometimes tenfold, and when it skyrocketed, several things happened. First off, you actually had brownouts in California, but you also forced utilities like Snohomish County Public Utility District in Washington State to enter into long-term contracts to try to ameliorate, to try to reduce the outrageous hits they were taking in these skyrocketing prices. Enron tried to sort of lure them into these long-term contracts and were sometimes successful because they were punishing ratepayers with these outrageous prices.
Third example. The Enron traders talked about who they would like to be running the Federal Government, and they talked about it in terms about who would be on Enron's side. They talked about who would be favorable to Enron, who would sort of wink at the wrongful actions by Enron, who would be sort of the cop who was asleep at the switch; and they reached a conclusion pretty quickly.
First off, they noted that Enron was the biggest contributor to the election campaign of President George Bush. They then noted that would it not be great if the next Secretary of Energy was Ken Lay, the disgraced CEO of the Enron Corporation. What they said was, How great would that be for all the players in the market. He would open these markets up.
Now, they were right on that. If Ken Lay was Secretary of Energy, he would have opened up these markets and
would not have taken any steps to try to tamp down the rapacious behavior of Enron, but it turned out they did not need Ken Lay as being Secretary of Energy because the people in the Bush administration were quite effective in not doing anything to lift a finger to stop Enron from gouging west coast ratepayers. They got what they wanted. They got cops on the beat who just winked and let the bank robbers take money out the door without doing anything about it.
It is very interesting here. The prediction of the Enron traders that, number one, they could congest these lines and drive up prices was accurate, much to the damage of people in Washington, Oregon and California; but their second prediction, that the President of the United States would let them get away with it, was accurate, too. That is the reason why it was such a grand shame here today when the Republican Party would not let this House vote on an amendment to simply enforce these laws, to finally blow a whistle on Enron and blow a whistle on the Bush administration for their failure to enforce this law.
I would like to yield to the gentleman from Oregon (Mr. DeFazio) who has been fighting this battle now for several years, who has been a stalwart on it, who has a never-give-up attitude.
Mr. Speaker, I think it is important to go into our conversation in some detail with the Vice President.
This was a bipartisan meeting with members of the west coast delegations, and what we did is we laid out the evidence for the Vice President, and stoplights in California were not working at the time we were talking to the Vice President of the United States, begging him for assistance. What the evidence we showed him was that at the time we were talking to him fully 32 percent of all the generating capacity in the west coast of the United States was turned off. At the time that stoplights were going out in California, Enron and its co-conspirators had turned off almost a third of all the generators in the west coast. They have tried to lay this excuse that, well, we were maintaining them, which was pretty lame because on the average in the last 12 years there has only been 2 to 4 percent of these plants down.
So what we told the Vice President, in a pretty cogent way is, Mr. Vice President, it is obvious someone is gaming the system. There is clear manipulation going on. There is skullduggery. This is a scandal. One-third of the generators are turned off. You are causing brownouts in California. We are having 1,000 percent run-ups in the State of Washington. We need your help. We need your help to force FERC to enforce the law. And I will never forget what he said to that request.
He looked at us in the eye, and he said, and this is about as close to a quote as I can come: you know what your problem is, you just do not understand economics. Now, we do understand economics. My degree happens to be in economics. It is just that we do not understand Enronomics. We do not understand Enronomics that the President and the Vice President of the United States sit on their hands and do nothing while consumers are gouged 10, 20 billions of dollars a year and are still suffering as a result of this Federal Government's refusal to act.
That is correct and the reason this is such a shame now is that for over 2 years we urged the administration to act. They did not act. There was an obvious defrauding going on, an obvious offense, an obvious crime. They let the embezzlement in a sense continue, and then told us they cannot get the money back for us. I want to make sure people understand this.
First, when we asked for relief, the President and the Vice President said you are on your own, we are not going to help you. They said that for 2 years. Finally, in 2003, they said, okay, now we give up, we are going to offer some price caps, and they finally gave us some relief in 2003.
But the horse was well out of the barn after 2 years of theft. What happened was they allowed that money to go to Texas. A lot of people in Houston bought mansions with the money we paid on the west coast, with money they stole from the west coast. The former Texas Governor let them steal it and did nothing for 2 years. Those people are now in Texas with money in bankruptcy that we cannot get.
Now because of the combination of President Bush's inaction and failure to follow his responsibility and the bankruptcy laws, this money is gone. But at least we ought to be able to stop Enron from getting another $122 billion from Snohomish County.
Mr. Speaker, I yield to the gentlewoman from California (Mrs. Davis) who has been a tremendous advocate from the very beginning trying to get some action by this government for California ratepayers.
Mr. Speaker, I appreciate the gentlewoman's eloquent statement, but I think it is important to state that the Democrats on this side of the aisle, we were prevented from having this amendment brought up. Think about the outrage, when we want democracy in Iraq, we do not have democracy on the floor of the House. The House is not even given an opportunity to vote on an amendment to get refunds.
To show how callous these Enron traders that the Republican Party has now decided to accommodate by not allowing this amendment even to be voted on, I want to read one transcript to let Members know what the Enron corporation was like. Here is a trader that says, Kevin, there was a guy here yesterday. He is some consultant for some ``blank'' other business we are supposed to be starting over. He said the guy came in and he said I am in California now, and my small consulting business, my energy costs have gone from $100 to $500 a month. It is unbelievable. I do not know what to do.
The trader said, I just turned from my desk and looked at him and said, Move.
Mr. Speaker, that was a very heartfelt comment, and that was Enron's attitude and apparently that is the Republican Party's attitude. He should have moved from the west coast because we are not going to do anything for refunds.
The same trader continued saying, ``The best thing that could happen is if there was a `blank' earthquake and let that thing,'' meaning the west coast, ``float out to the Pacific where they can just light candles.''
That is the attitude of Enron and that is the attitude of the majority party, apparently, that would not allow us to take action to do something about this travesty. California was hit, Oregon was hit, Washington was hit; and we are still suffering today.
Mr. Speaker, I yield to the gentlewoman.
The reason we need to respond is the administration has not. Beginning in 2000 and 2001, we have made every concerted effort to get the administration to impose some type of relief, price caps or otherwise. They refuse to take any steps. They sat on their hands. As Bonnie and Clyde ran out with the bank notes, these people sat there and watched this theft occur and did not lift a finger for 2 years.
Now in 2003, because they were so ashamed by what was going on, they finally issued some price caps. But unfortunately according to their commissioner, and this was on June 4, and this is amazing, talk about a catch-22 here, this administration's agency, the Federal Energy Regulatory Commission, whose job it is to protect consumers, they wrote me a letter. I urged them to take action to get refunds for people up and down the west coast.
They wrote me a letter and told me, number one, we have concluded there was massive violation of the law by Enron. We have concluded that there was manipulation. We have concluded there was gaming of the system. We have concluded in essence that there was congestion caused to shut down access to drive the price. We have concluded there was all of this skullduggery and scandal. But we do not think we have the authority to act to get refunds back from the people who had all of this money embezzled before 2003.
So here we have this administration saying we concluded there was a huge crime here. There was robbery, fraud, and embezzlement, and we know how much was taken from ratepayers; but golly gosh, we cannot do a thing about it.
Mr. Speaker, we had a chance today to do something about it to make it the law of this land that we are going to get those refunds, and the majority party refused to even allow that to come up for a vote, and it is a double scandal. It is a scandal that would make Enron proud.
Let me make reference to one thing, when there was a fire that shut down a transmission line and prevented transmission of electricity to California which allowed Enron to boost the rates almost a thousand percent, a trader said, ``Burn, baby, burn. That is a beautiful thing.'' That is why Enron would be very proud of the majority party today refusing to allow us to vote on something to get refunds for people. The majority party adopted the ``burn, baby, burn'' approach to not allow us to do anything to get these refunds.
If there was some question, if it was kind of a close call, like there are close calls in baseball, was he safe, was he out, if this was a close call whether Enron gouged west coast ratepayers, then perhaps there might be an excuse; but there is no excuse here. These tapes are the equivalent of a videotape of the crime, DNA of their identity, fingerprints, and a confession after their Miranda rights; and still when this crime occurred, the Republican Party will not help us remedy this wrong. We are going to continue this effort.
Just to give you an example, I just want to read specific language of two traders. They are talking about whether to keep a generating plant running or not. One trader asked the operator of the plant from Enron, ``How hard would it be for you to turn off your plant and then if we want to start it up later?'' He said, ``It's not that hard.'' So the Enron trader said, ``If we shut it down, could you bring it back up in 3 or 4 hours?'' The response was, ``Oh, yeah.'' The response was, ``Why don't you just go ahead and shut it down if that's okay.'' And when they shut it down, they boosted these prices up, sometimes 1,000 percent.
That type of language was found by Snohomish County in at least a dozen specific circumstances where Enron specifically requested energy to be shut down. We do not know all of them because we found out they were actually taking some of these calls on cell phones to try to get them off their recording system but we have got enough to know there was a clear crime here.
Mr. Speaker, I yield to the gentleman from Washington (Mr. Baird), who has so ably advocated for southwest Washington, which also suffered in this debacle.
Not only did they do nothing, this House today did nothing while our consumers are still continuing to pay these outrageous electrical rates in Snohomish County, Washington, 52 percent today, still higher. This is the long, dark shadow of Enron that today we refused to do anything about. I want to go through just a moment of history of how this administration has and has not acted and why this ends up with rates being so high.
It is interesting when President Bush was running for office in October 2000, when he was in San Diego and the prices were just starting to maybe go up, he said, ``I believe so strongly that part of this region is going to suffer unless you have a President who is willing to tell FERC to do what is right for the consumer.'' So when he was campaigning, he said he was going to make sure FERC did right by the consumers. He then took the oath of office in January 2001 and the next thing we heard was from Lawrence Lindsey, his assistant in the White House who said, ``They should expect no more help from the White House.'' Message from George Bush to the West Coast: Go fish. Let them eat cake. As a result, Enron had the green light from the President of the United States to go embezzle, cheat, gouge as much as they could from the West Coast and, by gum, Enron got the message. How do I know that? Here is a quote from one of the Enron traders. This is just right before the election. ``Matt,'' the Enron trader said, ``you know what? I'm scooping up every bit of `blank' power I can and take next summer,'' Tom said, ``because caps won't be there,'' meaning price caps, meaning he knew the President would do nothing about this problem.
Matt responded, ``They got to come for it. I'm bound to bet huge on the election. When this election comes, Bush will `blank' whack that stuff, man.'' I am paraphrasing the expletives out. ``He won't `blank' play this price cap stuff. I bet they'll impose a national price cap at $1,000 and that's fine with me.''
They bet and they won. The Enron traders won when George Bush was elected to office and when the Republicans controlled the House of Representatives because they have done nothing for the years 2000, 2001 and 2002 to remedy this bleeding by our consumers.
Just to make sure that people understand we are not kind of making this stuff up as we go along, I want to read about what the administration themselves concluded. On March 2003, the Federal Energy Regulatory Commission issued a final report on price manipulation in western markets. It found ``significant market manipulation,'' that ``many trading strategies employed by Enron and other companies were undertaken in violation of antigaming provisions.'' It identified more than 30 entities that might have manipulated the market. But Catch-22 from the Bush administration, we are not going to do anything about it. They concluded for 2 years before 2003 there was massive market manipulation and they refused to lift a finger to give refunds for people who were victimized. I could understand it if they said we are not sure if there was a crime here. But when the President of the United States' own agency concludes that billions of dollars were stolen from ratepayers in the western United States but they refused to lift a finger to get refunds, something is rotten in the State of Washington, D.C., and it is the influence of Enron Corporation still in the political process of those who still run the Federal Government. We have got to see some changes around here.
Mr. Speaker, unfortunately, our friends on the other side of the aisle were worse than silent. They absolutely choked off any consideration of the Enron scandal on the floor of the House today. Here we have this enormous scandal breaking with the exposition of these tapes, and they refused to allow any Enron discussion even or action on the floor of the House.
The gentleman brings up campaign contributions. It is interesting because so did the Enron traders. I want to read from a transcript of a tape of two Enron traders talking shortly before the election. The first one, his name was Matt. Matt was talking to Tom, and the transcript says: ``Tell you what. You heard this here first: When Bush wins--
``Tom: Caps are gone,'' meaning price caps, some action to keep prices reasonable.
``Matt: That `blank' Bill Richardson,'' former Secretary of Energy, ``he's gone, and Clinton, he's gone. All those socialists are gone.
``Tom: Yeah.
``Matt: And who's the biggest single contributor to the Bush campaigners?
``Tom: You.
``Matt: (Laughs) Enron.
``Tom: Enron. What?
``Matt: Enron.
``Tom: Is it Enron?
``Matt: Yeah.
``Tom: Is that true?
``Matt: Yeah, I think it is.
``Tom: The biggest single contributor.'' Enron Corporation.
``Matt: Yeah, the biggest corporate contributor.
``Holy--really? That's huge.
``And that is number one.
``Ken Lay,'' CEO of Enron, ``is going to be the Secretary of Energy.
``Tom: Get out of here!''
Tom does not have to get out of here because he got what he wanted. He got a compliant administration that let Enron rip off American citizens, Democrats, Republicans, Independents alike. They were bipartisan victims, and he got an administration to let them run rampant through the energy markets and steal billions of dollars from our citizens and neighbors who cannot afford it. He got what he wants. Now it is up to this Congress to do something to get what we want and what our citizens, Republicans and Democrats alike, want, which is a refund for the money.
Where did this money go? It went to buy a lot of mansions in Houston where the President used to be Governor, where his Vice President met with Ken Lay, the CEO of Enron, in a secret meeting to come up with a secret energy plan that is no secret any longer. There is no secret about what happened here. Enron got what they wanted, a compliant administration to let them take as much as they want from consumers and do nothing about it. And they got a Vice President, when we laid out the facts to them, when it was clear as a bell that this manipulation was going on, they got a Vice President, and do my colleagues know what he said? The same months that there were brownouts in California, he said ``The basic problem in California was caused by Californians.'' Maybe he is referring to the traders in Enron. Maybe they lived in California. I do not know, but I do not think so because it was obvious what was going on here. Thirty-two percent of all the steam-generated, gas, coal-fired plants feeding the west coast United States had been turned off, and the Vice President and the President of the United States told victims of that skullduggery that they were not going to do anything about it.
And now Congress needs to act, and we are going to continue to press on this because we have learned an interesting thing. We can actually get this administration sometimes to change behavior. For 2 years they refused to do anything about this. We finally shamed them into action, and in 2003 they finally adopted price caps that they said were going to ruin the U.S. economy and that this was a communist plot to have price caps. They finally did it in 2003 because they could not take the heat anymore. We are hoping this administration, when they feel enough heat, and our colleagues across the aisle, when they feel enough heat, maybe they will not see the light; but maybe they will feel the heat, and maybe they are going to then knuckle under and do something for the consumers that are owed so much. I would like a closing comment from the gentleman from Washington (Mr. Baird) as we close our discussion tonight.
Mr. Speaker, we do not want to believe that the U.S. Congress would allow such a massive rip-off of Americans to take place and not do something. We do not want to believe that just because Ken Lay was so close to President Bush that the whole Federal Government will do nothing. We do not want to believe that massive political contributions could end up with the Federal Government not doing its job. We do not want to believe that when the Federal Government itself concludes that there was a crime, that there was manipulation, that there was gamesmanship, that there was defrauding, that there was embezzling, that they would do nothing. We do not believe that is the right thing to do, and we think ultimately we have some confidence that we will actually prevail on this. Even if it takes November and we get a new Congress that will finally take action to get a refund for Americans, that is the route we will go.
I want to thank the gentleman from Washington (Mr. Baird) for joining me this evening.