California seeks return of 'unjust' Enron profits

By Jonathan Peterson and Dawn Wotapka
Los Angeles Times

The uproar over Enron tapes in which energy traders bragged of exploiting "Grandma Millie" and other Californians intensified yesterday as state Attorney General Bill Lockyer sued the disgraced energy company and U.S. regulators said they would review the new evidence.

"We want our money back. Grandma Millie ought to get her money back," Lockyer said, announcing a lawsuit that seeks to recover "potentially hundreds of millions of dollars" for market manipulation during the 2000-01 energy disaster.

Just hours earlier, the Federal Energy Regulatory Commission said it would review the tapes as potential evidence in regulatory proceedings, including California's major refund case from the energy meltdown.

The actions demonstrate the deep chord of public anger at the tape recordings, in which energy traders laid out strategies for gaming the state's electricity marketplace. In colorful and vulgar language, traders spoke openly of stealing from Californians — the fictitious Grandma Millie, among them — and even expressed the wish that a large earthquake would push the state into the ocean.

At one point, two Enron Corp. employees said they hoped that a wildfire would destroy California power lines, together chanting: "Burn, baby, burn."

Public ire grew with the airing on television and radio news programs of excerpts in which traders could be heard laughing about the state's predicament.

"These taped conversations indicate that this corrosive attitude seeped down from the corporate offices to the employees at the front line," FERC Chairman Patrick H. Wood III said yesterday.

The tapes came to light after a Washington state utility involved in its own legal battle with Enron obtained them from the Justice Department.

Lockyer's 20-page suit accused Enron of violating the state's Unfair Competition Law and the commodities fraud statute, and seeks a return of unjust profits.

Meeting with reporters in Santa Monica, Calif., Lockyer didn't set a precise dollar figure to be recovered, but maintained it could total more than $1 billion. He said the tone of the recorded conversations might influence a jury in setting damages.

"While the state reeled from the combined impact of sky-high power prices, supply shortages and rolling blackouts, the Enron defendants enjoyed massive, unprecedented profits," Lockyer said in the complaint.