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Newly Released Documents Show Texas PUC Leader?s Ties to Enron

Feb. 26, 2002

Newly Released Documents Show Texas PUC Leader?s Ties to Enron

AUSTIN, Texas – Documents obtained by Public Citizen?s Texas office show a close working relationship between Enron and the Public Utility Commission of Texas (PUC).

The nearly 500 pages of documents released by the PUC in response to a records request by Public Citizen include: calendar entries showing that PUC Commissioner Brett Perlman or his staff met with Enron executives on 14 occasions over two years; more than 520 pleadings filed by Enron in 92 rulemaking proceedings from 1990-1999; and notes of meetings attended by Enron executives and Perlman.

Also of interest were materials from a conference sponsored by Enron held last October in Washington, D.C., where Vice President Dick Cheney was to speak about energy policy. The conference was attended by Perlman and regulators. The conference was Enron?s attempt to explain to regulators why the California market had failed so dramatically.

The papers also show Perlman?s advocacy for broadband technology, which Enron had planned to trade, and his attempts to provide information to investors in new energy technologies.

“These papers show how deeply entwined Enron was with the leadership of the PUC,” said Tom “Smitty” Smith of Public Citizen. “Enron met frequently with Commissioner Perlman, and Perlman helped Enron plan conferences to promote the broadband technologies it was developing.” Perlman also sent invitations to investors to meet with those who were creating the new electrical energy marketplace.

Before his appointment to the PUC, Perlman worked as a consultant. According to his resume, one of his projects was “developing an opportunity assessment for the leading U.S. natural gas and electric trader.” Perlman later acknowledged under oath that this had been Enron.

“Perlman and Enron executives, including Ken Lay, frequently attended the same meetings,” Smith said. The documents included invitations to the Houston Technology Center and Greater Houston Partnership conferences on electric deregulation.

The documents also include detailed notes from Perlman on a variety of meetings he had with various market participants, including Enron. The documents also showed correspondence between Perlman and Dynegy.

New Power, Enron?s marketing subsidiary, visited Perlman, the records show. New Power sent press releases announcing the company?s formation, but also detailed its concerns about PUC?s pilot deregulation program.

Other documents showed that Enron voiced concerns about a number of failures in consumer protections. Enron complained about American Electric Power?s failure to give consumers information about their competitive options and steering their customers back to companies with which they were affiliated.

Perhaps the most interesting documents are those from the Enron-sponsored conference, which was held after the California electricity market had collapsed. Arthur Andersen, Enron?s auditor, was employed to provide its perception of what occurred in California.

“Not surprisingly for a ?not-so-independent? auditor ? Andersen blamed everyone but Enron,” Smith said.

The conference papers also included presentations on the wonders of derivatives and various future scenarios designed to “train” regulators to respond to threats to the deregulated marketplace.

Curiously missing are documents between former Commissioner Max Yzaguirre and Enron. Just two documents were produced, both letters to Yzaguirre from Enron. One related to Enron?s bankruptcy and its plans to transfer customers to other power suppliers, and the other involved the transfer of ownership of some of Enron?s natural gas interests.

“We wonder why there are so few documents in the file,” said Smith. “It seems peculiar that there would be so few written communications. There is a marked contrast between the amount of written correspondence between Perlman and Enron, and Yzaguirre and Enron.”