Restitution by Enron demanded
SANTA MONICA, Calif. — California Attorney General Bill Lockyer filed suit Thursday against Enron Corp. and several subsidiaries for allegedly manipulating market prices during the state’s 2000-01 energy crisis and costing Californians billions of dollars.
The suit, filed in Alameda County Superior Court, seeks restitution and unspecified damages from the Houston-based energy giant whose trading practices are under investigation by the Justice Department.
Three former Enron traders have been charged with wire fraud involving price manipulation in California. Two have pleaded guilty and a third awaits trial in October.
“The evidence, we think, is very, very compelling that California rate payers should be entitled to well in excess of a billion dollars — probably closer to 2 billion dollars — in profits that Enron took that were illegal,” Lockyer told reporters at a news conference in Santa Monica.
A message seeking comment left with an Enron spokeswoman was not immediately returned.
The lawsuit comes amid a series of developments in the case of Enron, the once high-flying energy company that declared bankruptcy in 2001 amid revelations of hidden debt and inflated profits.
Profanity-laced tape recordings released earlier this month revealed Enron traders openly gloating about manipulating California’s power market and boasting they would bring the state to its knees.
In excerpts of the calls, some of which Lockyer played Thursday, the traders bragged about ripping off California “to the tune of” a million dollars a day and of stealing money from “Grandma Millie.”
“Grandma Millie is California. I am her lawyer and she seeks justice,” Lockyer declared.
The filing comes amid the attorney general’s ongoing battle with the Federal Energy Regulatory Commission to collect as much as $9 billion in refunds from energy wholesalers that officials say the state is owed to cover overcharges it paid during the energy crisis. FERC has estimated the overcharges at around $3 billion and has collected less than $100 million to date.
“If FERC had been aggressive from the beginning we wouldn’t have to file these lawsuits” against Enron and other companies, Lockyer said.
The attorney general is also attempting to reverse a decision by FERC last month requiring that California refund Enron and other energy companies nearly $270 million in overcharges from power the state sold during the energy crisis.
The sales took place after the state stepped in to buy power on behalf of three nearly bankrupt California utilities to ensure an adequate supply.
The lawsuit filed Thursday contends that between 1998 and 2001 Enron violated California’s commodities and unfair competition laws by engaging in “a number of unlawful, unfair, fraudulent and manipulative trading schemes” to artificially boost energy prices and the company’s profits.