Tapes Show Enron Arranged Plant Shutdown
By TIMOTHY EGAN
Published: February 4, 2005
Wash., Feb. 3 - In the midst of the California energy troubles in early
2001, when power plants were under a federal order to deliver a full
output of electricity, the Enron Corporation arranged to take a plant
off-line on the same day that California was hit by rolling blackouts,
according to audiotapes of company traders released here on Thursday.
tapes and memorandums were made public by a small public utility north
of Seattle that is fighting Enron over a power contract. They also
showed that Enron, as early as 1998, was creating artificial energy
shortages and running up prices in Canada in advance of California's
larger experiment with deregulation.
The tapes provide new
details of market manipulation during the California energy crisis that
produced blackouts and billions of dollars of surcharges to homes and
businesses on the West Coast in 2000 and 2001.
In one January
2001 telephone tape of an Enron trader the public utility identified as
Bill Williams and a Las Vegas energy official identified only as Rich,
an agreement was made to shut down a power plant providing energy to
California. The shutdown was set for an afternoon of peak energy
"This is going to be a word-of-mouth kind of thing,"
Mr. Williams says on the tape. "We want you guys to get a little
creative and come up with a reason to go down." After agreeing to take
the plant down, the Nevada official questioned the reason. "O.K., so
we're just coming down for some maintenance, like a forced outage type
of thing?" Rich asks. "And that's cool?"
"Hopefully," Mr. Williams says, before both men laugh.
next day, Jan. 17, 2001, as the plant was taken out of service, the
State of California called a power emergency, and rolling blackouts hit
up to a half-million consumers, according to daily logs of the western
Officials with the Snohomish County Public Utility
District in Washington State, which released the tapes, said they
believed Enron officials had taken similar measures with other power
plants. This tape, they said, was proof of what was going on.
At the time, power plants in the greater West Coast grid were under a federal emergency order to keep their plants running.
spokeswoman for Enron, Jennifer Lowney, would not comment on the tapes,
citing a blanket policy of the energy trading company, which is
operating under bankruptcy protection and facing multiple criminal and
civil proceedings. "We continue to cooperate with all ongoing
investigations," she said.
Conversations between energy traders
and power plants were routinely recorded to give a record of
transactions. The tapes were part of a large seizure of evidence by the
F.B.I. The Snohomish County utility, which is in a court battle with
Enron, obtained them through a legal action.
released by the district last summer showed Enron officials joking
about how they were "stealing" more than a $1 million a day from
California and fleecing "Grandma Millie" while bringing Enron record
Other tapes released on Thursday showed Enron
executives discussing their fear of going to jail for manipulating
power markets in Canada and the United States. And memos showed that
Enron practiced as early as 1998 to create artificial shortages and run
up prices and extend the market manipulation to Canada.
former Enron traders have pleaded guilty to federal criminal charges of
fraudulently manipulating the West Coast energy market. Enron's former
chairman, Kenneth L. Lay, and former president, Jeffrey K. Skilling,
are under federal indictment for fraud.
In cooperating with
federal officials, West Coast traders have told how they devised
schemes named "Death Star" and "Get Shorty" to make billions of dollars
out of California's disastrous experiment with energy deregulation.
until the tapes were released on Thursday, there had been few public
details of how Enron set in motion the phony power shortages.
officials had long denied that they illegally shut down plants to
create artificial shortages. In March 2001 - two months after the
recording showed how the Nevada plant was shut down- Mr. Lay called any
claims of market manipulation "conspiracy theories."
uncovered by Snohomish County also show that Enron rewarded midlevel
executives based on their performance in manipulating the West Coast
The tapes and memos were filed this week with the
Federal Energy Regulatory Commission, as part of a broad investigation
into how much money was lost by Enron market manipulation. Snohomish
County is seeking to void a $122 million lawsuit by Enron over an
energy contract the utility said was based on fraud.