Senator Feinstein Calls for Hearings on New Evidence of Fraud and Manipulation in the
Western Energy Market
December 11, 2002
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Washington DC - U.S. Senator Dianne Feinstein (D-Calif.) today called for hearings in the Senate Energy Committee to examine new evidence of fraud and manipulation in the Western Energy Market. The evidence was contained in audio tapes, released by the Federal Energy Regulatory Commission (FERC) today, which demonstrate how traders at Williams conspired with AES Energy plant operators to keep power offline and drive up prices in California.

In a letter to incoming Chairman of the Senate Energy Committee, Pete Domenici (R-NM), Senator Feinstein wrote: "Based on these developments, I would like to request a hearing to learn the extent of market manipulation and to urge FERC to issue penalties against bad actors in the energy sectors. I believe there are many questions about the corporate behavior of the entire energy industry, and we must get to the bottom of what is going on."

Following is Senator Feinstein's statement:

"Week after week, new revelations of widespread manipulation of the California Energy Market come to light, including the tapes released today, which demonstrate that the AES operator at the company's California plant prolonged maintenance at the instruction of a Williams employee, because California was paying a premium for power.

"It is very important that these tapes were released today. I believe that they demonstrate very clearly that market manipulation led to the dramatic escalation of price in the Western Energy Market in 2000. This behavior is egregious, illegal, and reprehensible, and any companies or individual that are found to be involved should be severely punished.

"For the first time, I am beginning to realize the depth, breadth, and scope of the chicanery that increased California's electricity prices from an average of $30 a megawatt hour to as much as $3000 a megawatt hour, and which resulted in gas prices that were as much as $40 per decatherm more than in San Juan, New Mexico, when the cost to transport that gas was no more than a dollar.

"This is what happens when federal regulations are not adequate enough, when regulators are asleep at the wheel, and when Congress does not take an active oversight role."

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