WASHINGTON - Governmental Affairs Committee Chairman Joe
Lieberman’s investigation into the federal oversight of Enron
Corp. has produced evidence that the lead agency overseeing
energy markets missed signs of potential problems just months
before Enron collapsed.
Documents provided to the Committee by the Federal Energy
Regulatory Commission reveal for the first time that the agency
conducted an internal investigation of Enron’s energy trading
practices beginning in May 2001, in the midst of massive energy
price spikes in the West. In August 2001, the inquiry concluded
that Enron was in no danger of failing, just two months before
its eventual collapse.
"In the end, the 2001 FERC inquiry is ultimately more
noteworthy for what it overlooked than for what it scrutinized,"
Lieberman said in a letter to FERC Chairman Pat Wood. "At a
minimum, a more searching inquiry into Enron’s opaque trading
practices would, we hope have led FERC to question whether it
truly was discharging its duty to maintain just and reasonable
energy rates."
The FERC investigation, initiated by the general counsel’s
office conducted inadequate analyses and reached the exact wrong
conclusions about Enron’s financial status. Although the report
identified a number of areas that should have raised red flags -
for example, the extent to which Enron was financially leveraged
- the agency never completed it’s inquiry, never distributed it
to agency commissioners, and took no course of action.
"This incident is symptomatic of FERC’s general failure to
oversee the energy market and to protect consumers," Lieberman
said. "People were taking advantage of the system for their own
profit, and despite warnings, FERC failed to take note. Had the
agency followed through, this report might also have served as a
warning of Enron’s eventual collapse."
Attached is a copy of Chairman Lieberman’s letter to
Commission Chairman Wood.
Lieberman letter to FERC
Chairman Pat Wood