FERC asks for more information about ‘wash’ trades

By Sylvie Dale, Online Editor

May 21, 2002 — The Federal Energy Regulatory Commission (FERC) has issued a second major request for information on energy companies’ trading practices after learning of several practices used by the bankrupt energy giant Enron.

This time, FERC is asking for more information about companies’ participation in “wash,” “round trip,” or “sell/buyback” trades.

In an open letter dated May 21, FERC has asked for more information on trading practices from the sellers of wholesale electricity and/or ancillary services in the U.S. portion of the Western Systems Coordinating Council during the years 2000-2001. The attached list of recipients totaled about 150 companies.

The letter, signed by Donald J. Gelinas, the Associate Director of the FERC Office of Markets, Tariffs and Rates, widened FERC’s investigation of the possible manipulation of electric and natural gas prices (Docket No. PA02-2-000).

The data request was posted on FERC’s web page for Docket No. PA02-2-000 and, in addition, and was sent by e-mail to a representative of the designated companies.

On April 2, 2002, in response to FERC’s March 5 request, all jurisdictional and non-jurisdictional wholesale sellers in the United States portion of the WSCC reported certain historical information on both physical and financial transactions for calendar years 2000 and 2001.

The financial transaction data were not reported in a consistent manner, so that it cannot be used to identify so-called “wash,” “round trip,” or “sell/buyback” type transactions. As a result, FERC said the follow-up data request is necessary.

As before, the commission asked for the data to be signed under oath, in the form of an affidavit, by each company’s president, chief executive officer, general counsel, or a corporate officer of comparable authority and responsibility, after the company, under the supervision and control of that individual, has diligently conducted a thorough investigation into the trading activities of the company’s employees and agents, including those of its affiliates1 and subsidiaries, in the U.S. portion of the WSCC during the years 2000 and 2001.

The energy companies were told to respond on or before May 31.

Responses to FERC’s earlier request for information regarding trading practices were due May 22.

As with the earlier request, FERC said if a company should fail to respond, it could possibly revoke the utility’s authority to sell wholesale electricity or related services at market-based rates.

The most recent requests for more information began when FERC received three Enron memos which explained a number of complex trading schemes with names like “Death Star,” “Wheel Out” and “Fat Boy” that had the effect of raising electricity prices and reaping profits for the once powerful energy company.

For more information, visit FERC’s web site at http://www.ferc.fed.us/electric/bulkpower/pa02-2/pa02-2.htm#5-22.

Previous articleIllinois Power exercises $300 million credit facility
Next articleBroad-based coalition calls for congressional action on comprehensive energy plan

No posts to display