Enron Drove Up Cali. Power Prices

California Senator Dianne Feinstein called for the Justice Department to launch a criminal investigation of Enron in light of the new evidence.

“In my book, this is outright fraud,” Feinstein wrote in a letter to the Justice Department. “Documents released by FERC indicate that Enron was not only manipulating prices in the West, but also engaged in a number of calculated strategies such as ‘Death Star,’ ‘Fat Boy,’ and ‘Get Shorty’ to either receive payment for energy not delivered or increase price.”

Written in December 2000 by Enron lawyers, the documents show that company traders used these code-named strategies to increase Enron’s profits from trading power in California. Enron’s tactics included engaging in sham sales to increase electricity prices, creating phantom congestion on transmission lines and submitting false information to the state.

In past statements, Enron officials blamed the California power crisis on the state’s electricity deregulation plan, a lack of new sources of power generation and environmental factors such as drought.

Meanwhile, opening statements began in Arthur Andersen LLP’s obstruction of justice trial in Houston for shredding documents related to Enron, the first criminal case to emerge from the collapse of the energy giant.

Judge Melinda Harmon ruled Tuesday that evidence of similar problems with other Andersen clients may be introduced to the jury. The accounting firm was already on probation for signing off on misleading accounting when it shredded Enron documents.

A conviction in the trial could prove a fatal blow for the firm, which has suffered huge losses in clients, partners and employees in the wake of Enron’s downfall.

The prosecution’s lead witness is former Andersen partner and senior auditor in charge of the Enron account, David Duncan. In a plea deal for immunity from other charges, Duncan pleaded guilty to obstruction of justice April 9 and has admitted to shredding documents to hinder the Securities and Exchange Commission’s investigation into Enron’s complicated partnerships.