For Immediate Release:

Tuesday, May 7, 2002

(WASHINGTON, D.C.) – In a letter to its Chairman, Sen. Patty Murray called on the Federal Energy Regulatory Commission to review the sluggish pace of its consumer protection investigations, and evaluate whether FERC itself has adequate resources to conduct its regulatory mission.

Revelations over Enron's potentially fraudulent efforts to manipulate the Western energy markets, raise questions about the ability of FERC to do its job.

"I am beginning to suspect that FERC is unable to execute its statutory authority," Murray wrote. "Every time we look to FERC to regulate wholesale electric markets and protect consumers, FERC is painfully slow to act."

Murray also asked that any potentially criminal or fraudulent activity uncovered by FERC in its ongoing Enron investigations be immediately referred to the Department of Justice for criminal prosecution.

"It is obviously not enough for organizations that purposefully and potentially fraudulently manipulate energy markets to fear having to renegotiate contracts or make refunds. It is clear that organizations that potentially cause massive economic displacement need to fear tough criminal investigations."

A copy of the letter follows:

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May 7, 2002

The Honorable Patrick Henry Wood III
Federal Energy Regulatory Commission
888 First Street NE
Washington DC, 20426

Dear Chairman Wood,

As you know, last year there was an electricity crises in the west. At the time, I and a number of others in the western states congressional delegations pushed the Federal Energy Regulatory Commission (FERC) to take action to protect consumers. Eventually, FERC appropriately took steps to set temporary price caps to alleviate some of the problems in the west coast. However, I have serious concerns regarding the time it took FERC to take this important action.

Also during the electricity crises there were complaints that the electricity markets in the west were being manipulated. Again the western states congressional delegations pressed for continued investigations into what happened to the electric markets in the west. Just yesterday, over a year after the electricity crises began, documents were released that demonstrate Enron had manipulated electricity markets in the west. I am again concerned that it took a year for FERC to investigate these events and obtain this information.

As you know, a number of utilities have filed petitions with FERC for relief from unreasonable long-term contracts. It is within the authority of FERC to void long-term energy contracts. However, we continue to wait for FERC to take action.

I have spoken with you on a number of occasions and it is clear that we both share the same goal. We both want effective wholesale electric markets with electric consumers being protected from unjust rates and business practices. However, I am beginning to suspect that FERC is unable to execute its statutory authority. Every time we look to FERC regulate wholesale electric markets and protect consumers, FERC is slow to act.

In your ongoing investigations associated with Enron, if you encounter potentially criminal or fraudulent activity, I encourage you to refer these issues to the Department of Justice. It is obviously not enough for organizations that purposefully and potentially fraudulently manipulate energy markets to fear having to renegotiate contracts or make refunds. It is clear that organizations that potentially cause massive economic displacement need to fear tough criminal investigations.

FERC has been working in recent years to order regional transmission organizations (RTOs). Reviewing RTO applications and the ongoing regulation of these transmission organizations will consume additional resources. Additionally, some of the provisions contained in the pending Energy Policy Act of 2002 will give FERC additional authority to regulate markets and authorize market-based electric rates. This new authority will also provide an additional strain on FERC resources.

Chairman Wood, I ask that you conduct a thorough review regarding the timeliness of recent FERC actions associated with consumer protection and preventing unfair practices and evaluate the adequacy of resources available to FERC to conduct this mission. I think it is essential that FERC be capable of executing its important mission. I would appreciate if you reported the results of this review and resource evaluation to me at your earliest opportunity.

Sincerely,

Patty Murray
United States Senate