Ensign, Reid Letter Calls for Inclusion of Enron Provision in Energy Bill

ENSIGN, REID LETTER CALLS FOR INCLUSION OF ENRON PROVISION IN ENERGY BILL

Senators John Ensign and Harry Reid are urging their colleagues to support inclusion of a Nevada ratepayer protection provision in the Energy Bill currently being crafted by members of the House and Senate. The Senators have drafted an amendment calling for the Federal Energy Regulatory Commission to judge the merits of $330 million worth of contracts that defunct energy company Enron is attempting to collect from Sierra Pacific and Nevada Power. Enron never supplied the power. The text of the letter follows:

Dear Chairmen Barton and Domenici, and Ranking Members Dingell and Bingaman,

We write to urge you to include in the comprehensive energy bill (H.R. 6) conference report a very modest yet critically important provision contained in the Senate-passed version of this legislation. Section 1270 of the Senate bill would prevent a bankruptcy court from unilaterally enforcing fraudulent Enron power contracts, and collecting additional profits from the same consumers already severely harmed by Enron's illegal market manipulation schemes during the Western energy crisis of 2000-2001.

Given the unprecedented circumstances presented by Enron's bankruptcy and its legacy of power market manipulation, we hope you will thoroughly review the facts in this matter. We believe that any such review will lead to the common-sense conclusion that Section 1270 is a worthy provision. It simply ensures that Western utilities and the consumers they serve are allowed to seek justice in the venue Congress created to oversee "just and reasonable" rates in our nation's power markets.

Section 1270 of the Senate-passed bill would affirm the Federal Energy Regulatory Commission's (FERC's) authority to determine whether payments associated with Enron power contracts entered into during the Western energy crisis—and impacted by the company's price gouging schemes—are lawful under the Federal Power Act. As you know, a number of utilities in the West were counterparties to Enron contracts cancelled when the corporation began its scandalous collapse into bankruptcy. But despite the substantial body of evidence now documenting the brazen market abuses Enron committed to drive up power prices, Enron has nevertheless turned around and sued these utilities in bankruptcy court for "termination payments," for power that was never even delivered. Today, there is more than half a billion dollars at stake for consumers in the states of Washington, Nevada and California.

Currently, there is a jurisdictional dispute between a federal bankruptcy court and FERC as to which of those two forums should decide whether Enron acted consistent with federal energy law. We believe this issue is ripe for legislative action, given the fact that the court in December 2004 took the extraordinary step of enjoining FERC from proceeding with an evidentiary hearing related to the "termination payments" issue.

Certainly, we do not believe that Western ratepayers should be required to pay Enron one penny more in profits. But in light of Constitutional concerns that were considered at some length by the Senate Energy and Natural Resources Committee, Section 1270 does not substantively interject the Congress into the underlying legal disputes. Instead, it simply stipulates that the federal agency whose statutory responsibility is to protect ratepayers -- and not a bankruptcy court whose priority is the welfare of the estate -- should decide whether Enron is entitled to collect more than half a billion dollars in "termination payments" for power Enron never delivered.

Section 1270 is supported by numerous Supreme Court precedents that recognize the right of the Congress to allocate responsibilities between federal agencies and bankruptcy courts on matters that have not been subject to final resolution. And it is certainly supported by our constituents, who should at the very least have issues of this significance decided in the proper forum.

Without the benefit of the proper regulatory review, our constituents would be forced to pay hundreds of millions of dollars in additional Enron profits. Our constituents' money would even be used to compensate corporations on Enron's creditors list that have themselves been fined by the Securities and Exchange Commission and Federal Energy Regulatory Commission, related to either their role in Enron's bankruptcy, or their own schemes to manipulate Western energy markets.

Any such conclusion to this matter would add additional insult to the substantial injury already suffered by the ratepayers of the West. On the contrary, Section 1270 of the Senate-passed bill would ensure a fair and transparent process for the resolution of this tragic chapter in the Enron saga, and we ask for your support of this provision.

Thank you for your consideration of this matter, which is of such extreme importance to our constituents.

http://ensign.senate.gov/media/pressapp/record.cfm?id=241118&&