Regulatory Agency Fought Release Of Tapes

CBS, June 16, 2004

LOS ANGELES -- They are the audiotapes Enron -- and the government -- didn't want you to hear: recordings of Enron traders gloating over the way they manipulated energy shortages to maximize profits.

The tapes were first obtained by CBS News Correspondent Vince Gonzales, and aired on the CBS Evening News. Tonight Gonzales reports on what Enron plans to do now that the tapes have gone public.

Western states hard hit by the energy crisis of four years ago still owe hundreds of millions of dollars to the very same companies that rigged electricity markets, pushing up prices, causing rolling blackouts and power shortages.

"We had to go out and buy energy to keep our system in the red, to keep our lights on, to keep the strip up and running and we had to do so at exorbitant prices," says Russ Campbell, attorney for the Nevada Power Company.

Tapes given to the Federal Energy Regulatory Commission, or FERC, show Enron and its partners in Nevada gouged consumers and forced utilities in that state— and others throughout the west— to sign expensive long-term contracts at the height of the crisis.

"I want to see what pain and heartache this is going to cause Nevada Power Company," says one Enron trader on the tapes. "I want to f--k with Nevada for a while."

"What do you mean?" a second trader asks.

"I just, I'm still in the mood to screw with people, OK?" the first trader answers.

"This was not a smoking gun, this was an audio tape of the bullet coming out of the chamber, hitting the victim and the killer standing over the body and laughing about it," says Nevada Power Company's Campbell.

But officials at the FERC, the very agency charged with regulating energy companies, has not only known about the tapes for two years, but fought attempts to release them.

Now Senator Barbara Boxer of California has called on the FERC to go after those who gouged energy consumers and end those expensive contracts -- or else.

"I said wait a minute, who are you representing here, those folks who cheated us or the consumers," says Boxer.

"I'm calling on President Bush to ask for the resignation of any FERC commissioner who continues to stand in the way of justice for California consumers who were victimized during the energy crisis," she says.

But to add insult to injury, Enron and other energy companies hope to pull themselves out of bankruptcy by collecting on the contracts, and are now suing their victims.