April 29, 2003

Washington, DC –U.S. Senator Ron Wyden (D-Ore.) today announced Justice Department approval of an agreement allowing the Bonneville Power Administration to escape costly, unfair power purchasing contracts with the failed Enron Corporation. The deal, which allows BPA to pay a contract termination fee instead of continuing to buy power at the high cost Enron originally set, will save BPA as much as $200 million according to the agency. The end result will be a reduction in wholesale power prices of as much as five percent – substantially reducing projected rate increases for Northwest ratepayers.

“I’m pleased we were able to convince BPA to get out of these overpriced contracts with Enron,” Wyden said. “BPA has now done the right thing with regard to reducing these costs and I hope they find other cost savings for Northwest ratepayers.”

Wyden had urged the Bush administration to allow BPA to get Northwest ratepayers out from under the Enron contracts – worth almost $700 million – for many months. BPA administrator Steve Wright agreed with Wyden, and BPA subsequently initiated negotiations with Enron to reach the agreement approved today. BPA Administrator Steve Wright said he appreciated Sen. Wyden's championship for Northwest ratepayers.

“Sen. Wyden's consistent calls for relief from high electricity prices put BPA in a better position to negotiate this agreement with Enron,” said Wright.

BPA is the largest power wholesaler in the region, supplying an estimated 45 percent of the region’s power. Under its original contracts with Enron, BPA contracted to buy enough electricity to power 300,000 Northwest homes between 2003 and 2006. Enron’s market manipulation inflated the price for that electricity far above normal market rates, turning the contracts into expensive obligations for BPA and raising prices for Northwest consumers. Justice Department approval of the contract termination will allow BPA to purchase power at much lower market rates, instead of paying the inflated Enron price.

Since the beginning of the Enron scandal, Senator Wyden has sought to mitigate its effects on Northwest ratepayers, particularly by urging BPA to find a way to protect

Northwest ratepayers from costly, fraudulent contracts with Enron. Following is a brief chronology of his efforts on this issue:

• In December 2001, Wyden and Senator Jeff Bingaman (D-N.M.) told FERC Chairman Pat Wood that an increase in interstate power brokering by independent, unregulated marketers was leaving consumers unprotected from market manipulation and price spikes. They noted that during the West Coast energy crisis, state regulators and consumer advocates had no jurisdiction to investigate allegations of price gouging by Enron and other power marketers.

• In January 2002, Wyden was the first Senator to formally ask FERC Chairman Wood to investigate Enron’s manipulation of the Northwest energy market. At a hearing of the Senate Energy Committee, Wyden also raised the issue of Enron’s market manipulation and its direct impact on Northwest ratepayers, saying “The testimony indicates that following Enron’s bankruptcy, right at the time of filing, the forward markets on the West Coast dropped by 30 percent. There were no other changes on the West Coast, no changes in hydro supply, fossil fuel prices. People were in the dark, and I am not sure that the country can conclude that Enron was not manipulating the energy markets on the West Coast.”

• In April 2002, even before the release of documents revealing Enron’s market manipulation schemes, Wyden asked at a hearing of the Senate Commerce Committee about BPA efforts to cash out of its $700 million in high-priced power-purchase contracts with Enron. “The reason the issues we’re examining right now are so important is that if fraudulent activity was taking place at the time that those contracts were entered into, that then gives BPA another opportunity to get out from under those contacts,” he said.

• In May 2002, Wyden twice wrote to BPA Administrator Steven Wright about the estimated savings to Northwest ratepayers if BPA were able to exit from its overpriced contracts with Enron. He pressed Wright to take steps to get BPA and Northwest ratepayers out from under the Enron contracts, and questioned why BPA had not to date aggressively pursued a petition with FERC to reform its overpriced contracts.

• Also in May 2002, Wyden cosigned a letter with Senators Harry Reid (D-Nev.), Patty Murray (D-Wash.) and Maria Cantwell (D-Wash.) to FERC Chair Wood urging FERC to provide prompt relief to consumers throughout the West who have been severely harmed by the region’s dysfunctional energy market and the associated unjust and unreasonable wholesale electric prices. Wyden has singled out Senator Cantwell for praise in helping Northwest ratepayers get out from under the Enron contracts.

“This is an important victory for Northwest ratepayers,” Cantwell said. “Enron robbed the Northwest during the energy crisis and we are finally beginning to get out of these over-inflated deals. But our fight is not over – there are still contracts between Enron and Northwest utilities that must be terminated by FERC.”

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