Regulators bar bankrupt Enron

By Mark Sherman
Associated Press

WASHINGTON — Federal energy regulators yesterday punished bankrupt Enron Corp. for its role in manipulating Western power markets two years ago and threatened costly penalties for the company's partners in that scheme.

The commission issued what Federal Energy Regulatory Commission Chairman Pat Wood called a "death penalty" for the company, barring it from competitively selling electricity and natural gas in the United States.

California's deputy attorney general, Vickie Whitney, viewed the action in the context of Enron's bankruptcy and legal troubles. "It's like having a dead horse in the middle of the room and going up and kicking it," Whitney said.

The FERC also voted to uphold the validity of long-term power contracts in California and other Western states that were signed at the height of the energy crisis in 2000 and 2001. The commission turned down requests for refunds for excessive power prices in the Pacific Northwest.

Regulators have grappled for three years with the skyrocketing prices and power blackouts that followed the deregulation of electricity in California. Long-awaited refunds for California will not be ordered for several months and investigations related to the energy crisis will extend into 2004, Wood said.

Under the ruling, the company may still sell power, but at prices far below market rates, virtually shutting down the company's ability to compete. It can resume regular business once it emerges from bankruptcy proceedings and gets federal approval.

Wood said it was the first time the commission had imposed such a penalty on power sellers, although he acknowledged that Enron has ended much of its power trading.

"We send a clear signal that competitive markets must work in the interest of customers and the public interest," he said.

An Enron spokeswoman said the company was reviewing the order. "In the meantime, we are cooperating fully with FERC and other investigations," spokeswoman Karen Denne said.

The Houston-based Enron went bankrupt after a series of revelations of hidden debt, inflated profits and accounting tricks. Thousands of workers lost their jobs and investors were left with virtually worthless stock.

The company, which has been doing business, must file its bankruptcy reorganization plan by June 30.