Public Citizen Urges Government to Revoke Electricity Contract With Reliant Energy

June 29, 2004

Public Citizen Urges Government to Revoke Electricity Contract
With Reliant Energy

Reliant, Under Federal Indictment for Role in California Energy Crisis, Should Not Be Rewarded With Taxpayer-Funded Contract, Group Says

    WASHINGTON, D.C. – Public Citizen is asking the federal government to explain why it awarded a $35.9 million contract to Reliant Energy after the company was indicted for its role in the California energy crisis. In a letter sent today to U.S. Department of Defense (DOD) officials, Public Citizen asserted that Reliant Energy should not receive a taxpayer-funded contract to provide electricity to several military establishments, including Andrews Air Force base in Maryland and Walter Reed Army Medical Center in Washington, D.C., while it is under federal indictment.

 On May 19, the DOD awarded the contract to the company despite the fact that on April 8, the U.S. Department of Justice (DOJ) obtained a criminal indictment against the company, alleging that Reliant literally turned the lights out in California to make more money, a leading cause of the state’s energy crisis from 2000-01. The DOJ’s criminal indictment charges the company with conspiracy to commit wire fraud and manipulation of the price of electricity.  In addition to the criminal indictment, Reliant Energy agreed to pay $125 million to government authorities in fines, settlements and refunds for intentionally shutting down power plants to create blackouts that drove up profits during the California energy crisis.

    This is the second Public Citizen letter to DOD officials on the subject.  U.S. Sen. Dianne Feinstein (D-Calif.) also expressed her concern in a June 24 letter to the DOD asking if debarment procedures had begun.

In the letter sent today, Public Citizen requested answers to the following:   1) Did any individual or entity involved with awarding the contract have any knowledge of the criminal indictment of Reliant Energy prior to awarding the contract? 2) Did Reliant Energy notify any government officials involved in approving the contract of the company’s April 2004 criminal indictment? 3) Have any debarment and/or suspension proceedings been initiated against Reliant Energy, and if not, why not?

According to the Code of Federal Regulations, 48 CFR 9.400, government agencies can prohibit companies that have been indicted from receiving federal contracts.

   To read Public Citizen’s letter, click here.

   To read Senator Feinstein’s letter to DOD officials regarding Reliant energy, click here.