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New evidence in Enron case

'Fish kill power' from Columbia River

ANALYSIS

PORTLAND, Ore. - Summer in the city. People get frazzled. Frazzled enough
to talk in terms of 'fish kill power.'

Tapes released recently as part of the ongoing Enron investigation suggest
traders sold emergency power to California in August 2000 - power generated
at the expense of Columbia River salmon - at vastly inflated prices. Now
even non-Indians are feeling duped. The larger constituency is questioning
where the Federal Energy Regulatory Commission was when Bonneville Power
Administration sold the power south - and the salmon too - when the Enron
guys were manipulating the market for their own gain to the tune of
millions.

The time: Aug. 4, 2000. Place: the arid American West - California. There's
an energy crisis and fears of rolling blackouts. On the Northwest's
Columbia River, BPA has suspended the summer spill program - spilling water
over the dams to speed salmon to the ocean - and instead is working the
system hard, running the river's full force through its hydropower
projects. Downstream in Enron's Portland office, former head of the trading
room, Timothy Belden is chuckling all the way to the bank.

The August 2000 tape rolls: "It's hot and they don't have enough power,"
Belton said to Enron executive Rick Shapiro. "And they kill fish in the
Northwest so that people in California can go enjoy themselves at a
baseball game."

"And then what are we doing?" Shapiro asked. "Are we exporting some of the
'fish kill power' out of California?"

Belton's answer was yes. "We are exporting some power from California to
the Southwest," he replied.

Jump ahead four years to 2004. Same month. U.S. Senator Maria Cantwell,
D-Wash., played the 'fish kill power' tape at a news conference. She also
produces records showing that out of 19,584 megawatt-hours that BPA sent to
California, 6,731 megawatt-hours were sold to out-of-state markets in the
Southwest where prices were higher. Then Enron turned around and sold the
power back to California at inflated rates.

Head of the U.S. Justice Department's Corporate Fraud Task Force, Deputy
Attorney General Larry Thompson explained that the conspiracy enabled Enron
to intensify the California crisis even as it drove rates up. Thompson told
the Associated Press that "revenues from Belden's trading unit rose from
$50 million in 1999 to $500 million in 2000 to $800 million in 2001."

A tenfold increase in the first year and over half again as much the next
for Enron. And all the while the Northwest is pulling in its belt.

Situations like this are nothing new to the Columbia River tribes. They've
been watching the wealth that was once theirs get usurped by profit-driven
types for over a century now. To be certain, environmentalists and fishing
groups often align themselves with the Indians, but nonetheless, the
minority has remained a small one.

So, to have the large public utility districts in Washington that Cantwell
represents joining tribes and other champions of the salmon to object to
hydropower operations is a new twist.

Senator Cantwell made no bones about her position. "We know for a fact that
gaming was going on during the days when Washington state was forced to
sell power," she said. "We want the Federal Energy Regulatory Commission to
recognize how the Northwest was hurt by that and grant immediate relief."

Part of the problem is BPA's rate structure. The federal agency is bound by
law to offer power at rates established annually to utility districts
regardless of its ability to meet demand. As Columbia River Inter-Tribal
Fish Commission's Hydro Program coordinator Bob Heinith explained,
consequently, the year after the California crisis, BPA had to go out and
buy more power to meet regional needs. By prices had skyrocketed, so it
paid more for the energy than it was able to sell it to the utilities for.
Hit hard, Bonneville started talking about a rate increase. Started talking
about how it needed to curtail summer spill to keep rates down. Started
trying to do most anything - including back peddle on fish and wildlife
programs - to dig itself out of what seemed to be a nightmarish financial
picture.

Executive Director of the Northwest Sportfishing Industry Association, Liz
Hamilton certainly thought so. In a message to a Bonneville representative,
she stated that "BPA has, over the years, made some questionable financial
decisions. WPPSS [Washington Public Power Supply System, the massive
default on several nuclear power plants in the Northwest from the 1980s]
and a 1.8 billion dollar payoff to the aluminum industry come immediately
to mind."

Hamilton went on to draw connections between BPA's financial woes and the
persistence with which the agency seems willing to sacrifice the salmon
runs. "... This region has been fleeced by the manipulations of some
Texas-based energy corporations," Hamilton said. "If Enron energy traders
knew the importance of the spill to salmon, how much more should BPA
acknowledge this?"

Hamilton made a point. BPA seems to approach summer spill like it's
forgotten that science has said over and over that it's the most effective
means of speeding juvenile salmon to the sea. Again this summer, BPA was in
court over its plan to curtail the spill. In court with a case so thin it
didn't take the judge long to rule in favor of the Columbia River tribes
and parties that joined with them to oppose BPA.

Even after the decision came down, BPA appealed. Appealed and lost again.
If the public following in the newspaper didn't know better they'd think
"fish kill power" was the critical link in BPA being able to make ends
meet. At least readers would until they came across the article that was
published right after BPA lost its last appeal. A piece that stated BPA was
reducing prices in this fall's rate case. A piece that didn't even mention
spill or fish or "fish kill power."

Something somewhere is clearly smelly. And it isn't the salmon.

Hamilton agreed. "Imagine how we must feel when we watch a multi-million
dollar campaign to eliminate spill portraying how much Bonneville needs the
money, then less than one week after the 9th Circuit refused to overturn
the injunction, BPA announced rate decreases, that were of course, already
in the works."

Cantwell agreed. She wants FERC to get more aggressive. "They [FERC] are
the policemen on the beat, and the Northwest has been mugged, and they're
not doing anything about it," she said.

And of course the Columbia River tribes agree. But then, they have all
along.