Snohomish County Public Utility District has just won a major battle in a long war against Enron over a power contract that is a piece of the Western energy crisis. As summarized by the Administrative Law Judge at FERC:
This Initial Decision concludes that Enron violated its market based rate authority starting on January 1, 1997 and engaged in gaming and anomalous market behavior by itself and in concert with others. As a result, the Initial Decision concludes that Enron’s market based rate authority must be revoked as of January 16, 1997 and Enron is ordered to disgorge $1,617,454,868.50 of unjust profits for the period January 16, 1997 through June 25, 2003 (the Relevant Period). Furthermore, in this decision it is concluded that termination payments (Enron is seeking from Snohomish) are also unjust profits.
SnoPUD and its team deserve great credit for their persistence in the face of many obtstacles and pressures, and for their investigative work that produced some infamous snippets (“Grandma Millie”) and shameful facts of a notorious era.
One has to observe, however, some sobering aspects:
- A decade has elapsed since some of the events in this case–and the case is not over. (An initial decision by an administrative law judge is subject to further steps at FERC and, potentially, the courts.)
- The entire Western interconnection was subject to the tumult of which these events are a part. It’s been a long, messy, and expensive process to sort through the wreckage, with painful outcomes.
- Enron is bankrupt and Ken Lay is dead. It remains to be seen how much SnoPUD will collect of its stunning award, though it has been relieved from paying termination fees to Enron.
“Market certainty,” which many touted (and tout) as a virtue of market-based systems, is illusory if the market rules and enforcement of the rules can’t ensure just and reasonable prices. That is and will remain the challenge.