02.14.02

Senator Maria Cantwell's Statement (as prepared) on the Introduction of the Feinstein-Cantwell Legislation to Regulate Energy Futures Trading

Good morning, thank you for being here.

The Feinstein-Cantwell bill which we are introducing today closes a regulatory loophole created by Congress that Enron used as it turned political influence into profit at the expense of consumers.

Specifically, this bill places currently unregulated energy futures trading on EnronOnline and businesses like it under the regulatory authority of the Commodity Futures Trading Commission (CFTC).

The bill requires open books and transparency for markets in secrecy.

Most importantly, this bill would make patterns of irregular trading abundantly clear.

The regulatory exemption Enron got from Congress, coupled with steep drops in prices of forward contracts after Enron's bankruptcy, points to the possibility that Enron itself manipulated energy prices, unfairly driving up the value of long-term contracts.

Many people may not realize that Enron continues to hold gigantic long-term contracts with utilities throughout the county - at least $900 million worth in my home state of Washington alone.

And now we are learning that these contracts may have been the result of market manipulation by Enron.

In one case alone, the Bonneville Power Administration has long-term contracts with Enron totaling about $700 million.

At today's market prices, those contracts would cost $350 million.

That means BPA is paying Enron about $350 million more than current market value.

Contracts like this have translated into unacceptably high utility bills for ratepayers throughout the West, who deserve relief as soon as possible and should not be made to pay high prices for the next 3-5 years if in fact these rates are found to have been manipulated.

Enron was a major player in the spot and long-term markets for physical delivery while also operating the largest unregulated energy trading exchange in the world.

This bill would allow the CFTC to treat energy futures like other regulated commodities and allow them to:

Compare EnronOnline prices with competitors Compare forward market prices with physical market prices Investigate the books of online traders like Enron to search for irregularities Aside from these are the questions that we have asked FERC to investigate to determine whether Enron manipulated energy markets in the West.

By regulating trading and opening books, this bill would establish a framework and standard practices for similar investigations in the future.

Until we require open books and transparency from EnronOnline and businesses like it, the public will not be protected from those who attempt to manipulate markets and gouge consumers.