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Senate panel probes Enron's energy market impact

After launching a massive investigation into Enron Corp's accounting practices, US lawmakers on Tuesday took their first crack at probing the effect of the firm's collapse on energy markets.

At a Senate Energy Committee hearing on the issue, Democrat Jeff Bingaman of New Mexico, who chairs the panel, said while Enron provided little or no information on its business activities, US energy markets were unscathed by the company's failure.

"In the end it's my impression Enron's demise did not have a major impact on short-term energy markets," said Bingaman.

The top Republican on the Senate energy panel, Frank Murkowski of Alaska, came to a similar conclusion.

"I think it's fair to say that Enron's collapse appears to be a story of lies, of deceit, shoddy accounting, corporate misconduct and cover-up," Murkowski said. "But we can not lose sight of the fact that this is a business failure, not an energy market failure."

The chairmen of both the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission told the committee that Enron's downfall does not mean new federal regulation is needed for energy markets.

"It is not clear that giving the (FERC) commission additional authority within its current scope would prevent further Enron-like problems," FERC chairman Pat Wood told the committee.

Wood, who has repeatedly emphasized the Enron collapse had little or no impact on wholesale prices or supplies, said FERC has found no "substantial spillover effects" into the energy markets after the company's rapid implosion.

"In the aftermath of Enron's collapse, prices and energy markets remained stable -- neither electric nor gas deliveries have been disrupted," he said.

On Monday, Wood told reporters Enron appeared to be an accounting issue.

CFTC chairman James Newsome said Enron did not try to engage in market manipulation at any futures exchange.

"At this time we have no indication that manipulation of any on-exchange futures market was attempted by Enron," Newsome told lawmakers.

ENRON NAY HURT DEREGULATION

Supporters of deregulation fear Enron's bankruptcy will set back legislation to restructure the nation's $220 billion wholesale electricity market.

If enacted, the legislation would allow utilities and the new breed of energy companies that Enron once epitomised to tap a larger market for power, while offering US consumers greater choice and possibly lower electricity bills.

The problem: Enron's poster child-turned-pariah status has sullied the prospects of further deregulation.

In the House last month, Democrats said the Republican-written deregulation bill should be shelved until the ramifications of Enron are clear.

California Democrat Henry Waxman, speaking at a House Energy subcommittee hearing on Decemebr 12, said Enron's fingerprints are all over the legislation under discussion.

Now Senate legislation sponsored by Bingaman is in danger of being tarred with the same brush.

"They're going to kill the energy bill with Enron, and everybody will go along," said Christine Uspenski, an electricity policy analyst with Schwab Capital Markets in Washington.

Faced with a truncated legislative session and a plethora of Enron inquests, prospects are grim for a full vote on comprehensive electricity restructuring, she said.

"It's going to collapse under its own weight in a session that's been delayed by the fact that we all have to do all this due diligence on Enron," Uspenski said. "Congress can't afford not to look vigilant."

At least eight other congressional bodies are delving into financial and accounting aspects of Enron's debacle, including the possible role of its main auditor, Andersen.

The Senate Energy Committee's jurisdiction was limited to the Enron bankruptcy's effect on energy markets and consumers.

The committee wanted to know whether federal regulators had adequate statutory authority to investigate and head off future debacles.

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