| http://www.nytimes.com/2001/05/25/politics/25POWE.html
May 25, 2001 Power Trader Tied to Bush Finds Washington All Ears By LOWELL BERGMAN and JEFF GERTH Curtis Hébert Jr., Washington's top electricity regulator, said he had barely settled into his new job this year when he had an unsettling telephone conversation with Kenneth L. Lay, the head of the nation's largest electricity trader, the Enron Corporation. Mr. Hébert, chairman of the Federal Energy Regulatory Commission, said that Mr. Lay, a close friend of President Bush's, offered him a deal: If he changed his views on electricity deregulation, Enron would continue to support him in his new job. Mr. Hébert (pronounced A- bear) recalled that Mr. Lay prodded him to back a national push for retail competition in the energy business and a faster pace in opening up access to the electricity transmission grid to companies like Enron. Mr. Hébert said he refused the offer. "I was offended," he recalled, though he said he knew of Mr. Lay's influence in Washington and thought the refusal could put his job in jeopardy. Asked about the conversation, Mr. Lay praised Mr. Hébert, but recalled it differently. "I remember him requesting" Enron's support at the White House, he said of Mr. Hébert. Mr. Lay said he had "very possibly" discussed issues relating to the commission's authority over access to the grid. As to Mr. Hébert's job, Mr. Lay said he told the chairman that "the final decision on this was going to be the president's, certainly not ours." Though the accounts of the discussion differ, that it took place at all illustrates Enron's considerable influence in Washington, especially at the commission, the agency authorized to ensure fair prices in the nation's wholesale electricity and natural gas markets, Enron's main business. Mr. Lay has been one of Mr. Bush's largest campaign contributors, and no other energy company gave more money to Republican causes last year than Enron. And it appears that Mr. Hébert may soon be replaced as the commission's chairman, according to Vice President Dick Cheney, the Bush administration's point man on energy policy. Mr. Lay has weighed in on candidates for other commission posts, supplying President Bush's chief personnel adviser with a list of preferred candidates. One Florida utility regulator who hoped for but did not receive an appointment as a commissioner said he had been "interviewed" by Mr. Lay. Mr. Lay also had access to the team writing the White House's energy report, which embraces several initiatives and issues dear to Enron. The report's recommendations include finding ways to give the federal government more power over electricity transmission networks, a longtime goal of the company that was spelled out in a memorandum Mr. Lay discussed during a 30-minute meeting earlier this spring with Mr. Cheney. Mr. Cheney's report includes much of what Mr. Lay advocated during their meeting, documents show. Both men deny discussing commission personnel issues during their talk. But Mr. Lay had an unusual opportunity to make his case about candidates in writing and in person to Mr. Bush's personnel adviser, Clay Johnson. And when Mr. Bush picked nominees to fill two vacant Republican slots on the five- member commission, they both had the backing of Enron, as well as other companies. Mr. Lay is not shy about voicing his opinion or flexing his political muscle. He has transformed the Houston-based Enron from a sleepy natural-gas company into a $100 billion energy giant with global reach, trading electricity in all corners of the world and owning a multibillion- dollar power project in India. He has also led the push to deregulate the nation's electricity markets. Senior Bush administration officials said they welcomed Mr. Lay's input but did not always embrace it: President Bush backed away from curbing carbon-dioxide emissions, an effort supported by Enron, which had looked to trade emission rights as part of its energy business. "We'll make decisions based on what we think makes sound public policy," Mr. Cheney said in an interview, not what "Enron thinks." The Bush-Lay bond traces back to Mr. Bush's father and involves a personal and philosophical affinity. Moreover, Enron and its executives gave $2.4 million to federal candidates in the last election, more than any other energy company. While some of that went to Democrats, 72 percent went to Republicans, according to an analysis of election records by the Center for Responsive Politics, a nonprofit group. "He's for a lot of things we're for," said Mr. Johnson. But when it came to deciding on nominees for the commission, Mr. Johnson said that Mr. Lay's views were not that crucial. The two most important advisers, he said, were Andrew Lundquist, the director of Mr. Cheney's energy task force, and Pat Wood 3rd, the head of the Texas public utility commission. As governor, Mr. Bush named Mr. Wood to the utility commission. This year, when the White House filled the two Republican slots on the federal agency, Mr. Wood was the first choice, Mr. Johnson said. Consumer advocates and business executives praise Mr. Wood. But Mr. Lay also had a role in promoting him. Shortly after Mr. Bush was elected governor in 1994, Mr. Lay sent him a letter endorsing Mr. Wood as the "best qualified" person for the Texas commission. In all, there are five seats on the commission, two held by Republicans, two by Democrats and one held by a chairman who serves at the pleasure of the president. Mr. Hébert, who became a commissioner in 1997, was named chairman by Mr. Bush in January. The Federal Energy Regulatory Commission's mandate to ensure fair prices in wholesale electricity and natural gas markets makes it crucial to sellers like Enron as well as consumers. The movement toward deregulation sometimes leaves the commission caught in a tug of war: power marketers like Enron are trying to break into markets and grids controlled by old-line utilities, which operate under state regulation. The commission's chairman has considerable latitude in setting its agenda. As part of its oversight of the wholesale electricity markets, the commission ordered several companies to refund what it considered excessively high prices this year in California. One lesser offender named in the commission's public filings — $3.2 million, of a total of $125 million — was an Enron subsidiary in Oregon. |
