The betting in energy circles is that Enron's erstwhile big cheeses are in deep trouble now that the company's former top trader has pleaded guilty to manipulating the California power market.
But that may not be the half of it.
Sources close to the matter say Timothy Belden, who previously ran Enron's trading office in Portland, Ore., is prepared to implicate a number of other industry players in what could
shape up to be one of the biggest conspiracies in U.S. corporate history.
Deputy Attorney General Larry Thompson declined at a news conference last week to identify other alleged conspirators in the fleecing of California ratepayers.
But he did say that "Belden and others conspired to defraud California electricity consumers and customers."
This confirms a lot of hunches here in the Golden State, where folks knew something was screwy with the power grid long before federal authorities finally decided to weigh in on the matter.
Now we know exactly how it was done, at least as far as Enron was concerned.
Belden said he and his cronies would provide bogus data on how much juice was available at any given time to state utilities.
This would create the impression of congestion on power lines when none in fact existed, driving up demand and, better still, allowing Enron to charge an extra fee to relieve the congestion that wasn't actually there in the first place.
Enron also exported power generated in California to other states and then turned around and sold it back to us at a big markup as electricity generated elsewhere.
Chutzpah? These people were rewriting the definition.
Revenue generated by Belden's team soared from $50 million in 1999 to $500 million in 2000 and finally to $800 million last year.
"We scheduled energy that we did not have, or did not intend to supply," Belden told a judge in San Francisco. "I did it because I was trying to maximize profits for Enron."
The question now, aside from which former Enron bigwig will be in court next, is whether the other major players in the energy business were running similar scams.
Sources in a good position to know tell me that Belden is cooperating fully with investigators and is prepared to map out a far-reaching scheme involving all the big boys.
"We intend to pursue this investigation wherever it leads," Kevin Ryan, U.S. attorney for the Northern District of California, told reporters Friday. "Mr. Belden's co-conspirators -- and they know who they are -- should be very concerned."
Maybe they are already.
I'm told that last week's resignation of Dynegy President Steve Bergstrom was directly related to the looming prospect of Belden naming names. Dynegy also said it will exit the energy-trading business.
Dynegy is being investigated by the Justice Department and already has agreed to pay $3 million to the Securities and Exchange Commission to settle fraud charges.
A spokesman for the company, David Byford, denied that Bergstrom's decision to step down was tied in any way to Belden's case. On the other hand, Bergstrom came to power as a result of his success building up Dynegy's energy- trading operation.
For what it's worth, San Francisco's ChevronTexaco owns about 26.5 percent of Dynegy and is the Houston firm's largest shareholder.
Dynegy and other industry leaders have already said they played no role in exacerbating California's power woes. Enron said the same once upon a time.
Clearly we haven't heard the end of this.
UNBIASED BACKING: Speaking of whimsical doings in the energy game, you never have to look hard to see PG&E playing fast and loose with reality.
The impoverished utility, now pumping cash into efforts to defeat public- power initiative Proposition D, is scrambling to persuade the bankruptcy court to accept its own reorganization plan and not a rival plan drafted by state regulators.
As part of its propaganda efforts, Pacific Gas and Electric Co. took out ads pointing out that numerous state business organizations are in its corner.
The groups range from the California Chamber of Commerce and Contra Costa Taxpayers Association to the Fresno County Office of Education and the National Association for the Advancement of Colored People.
What the ads don't say is that of the 35 groups listed, PG&E has donated money to no fewer than 19 of them.
John Nelson, a PG&E spokesman, insisted that money given to the various associations between 1997 and 2001 was mostly membership dues.
"We asked for their support and gave them information about our plan," he said. "They took that information and came to their own conclusion."
You have to wonder, though, whether the decision-making process was swayed just a little by the $25,000 handed last year to the California Business Roundtable, for example, or the $12,300 given to the Oakland Metropolitan Chamber of Commerce.
We'll see when the bankruptcy court starts poring over the plans next month.
2002 San Francisco Chronicle
- 107 Energy
- 185 Corruption