Colorado River Commission Makes Public Secret Tapes of Power Traders' Talks
By John G. Edwards, Las Vegas Review-Journal -- Mar. 16
Faced with a hearing in state District Court, the Colorado River Commission on Monday publicly released recordings and transcripts of profanity-laced, formerly private conversations among power traders.
George Caan, the river commission's executive director, apologized to the
public and Nevada Power Co. about the conversations that were recorded by power
traders, which he characterized as "trader trash talk."
"The conversations to me are difficult to listen to," Caan told the
commission.
But he denied that the commission helped Enron game the Western power markets
during the energy crisis of 2000 and 2001.
While Bill Miller, power supply manager for the commission, talked about
creating problems for Nevada Power, "the actions did not follow the
talk," Caan added.
Nevada Power representatives, however, said the recordings show the state
agency did improper things during the power crisis.
The river commission provides Southern Nevada with hydroelectric power from
Hoover Dam and provides wholesale power purchased on behalf of Henderson
industrial customers and the Southern Nevada Water Authority.
The Federal Energy Regulatory Commission named the river commission among 25
other parties suspected of helping Enron and others manipulate the Western power
markets between January 2000 and June 2001. Many of those named agreed to pay
money to the federal government for their profits without admitting wrongdoing,
and some were dismissed. But proceedings continue against the river commission,
PNM Resources of New Mexico and Enron.
Nevada Power intervened against the river commission in the federal
regulatory case and started an arbitration proceeding against the agency.
Nevada Power sued the river commission earlier this month, seeking a court
order to make the tape recordings public. At first, the river commission balked,
but Caan announced Monday he was going to disclose the tape recordings to the
public. A hearing had been set for Thursday.
"I want to apologize to this commission, to all of the public at large
and especially to Nevada Power Company," Caan said, reading from a
statement.
Caan, however, contended that the river commission was innocent of
allegations that it helped game the Western power markets during the energy
crisis two years ago.
"We're too small to be able to do anything to influence those market
prices," Caan said in a later interview. The staff noted the 125 megawatts
that it uses in peak periods represents about one-half of 1 percent of Nevada
Power's peak load of 4,500 megawatts.
Russ Campbell, an attorney from Birmingham, Ala., who helped Nevada Power
investigate the river commission, disagreed.
"We think that at the end of the day they were assisting Enron to game
the market," Campbell said.
Caan acknowledged Miller was creating a negative imbalance on Nevada Power's
system in the spring of 2000 by acquiring less power than its customers
consumed. But Caan said he ordered Miller to stop creating negative imbalances
and that Miller complied.
Caan said the state agency negotiated a deal to pay $18,000 to Nevada Power
for negative energy imbalances in October 2000. The state agency also accepted
$250,000 in payments from Nevada Power because it had positive imbalances as
part of that agreement.
Campbell said the river commission didn't stop creating negative imbalances.
In addition, he said the commission did the opposite and overloaded Nevada Power
with electricity.
"They changed their game, and they went on to find another approach with
Enron," Campbell said. "They were just dumping energy on us at times
we didn't need it."
A memo from Dennis Peseau, an expert retained by the river commission, and
his partner George Carter concluded that Nevada Power owes the river commission
$4 million for positive energy imbalances during the period under review by
federal regulators. The memo added that the river commission owed Nevada Power
$1 million, resulting in a net $3 million that Nevada Power owed the river
commission.
Commissioners Monday voted unanimously to budget another $300,000 to a
Washington law firm representing the state agency in the regulatory case and
$80,000 to the Las Vegas law firm of Gordon & Silver to assist with the
arbitration case.
Las Vegas Mayor Oscar Goodman, who serves on the commission, voted no. He
said he wanted to first talk with the law firms about the legal costs. He
complained that commission officials failed to warn him about issues on the tape
recordings.
"I was told that there wasn't a problem (with the tape recordings), and
there is a problem," Goodman said.
Jim Salo, a special deputy attorney general, said the staff had not listened
to all 40,000 recordings of conversations and parts of conversations that were
recorded over an 18-month period.
Goodman also complained that the commission did not release the tape
recordings earlier but he questioned Nevada Power Co.'s motivation.
"Were they trying to embarrass us?" Goodman asked.
Goodman said he called Nevada Power to see about negotiating a settlement.
"I don't even get the courtesy of a civil response," he said.
WHAT THEY'RE SAYING: Some 900 recordings of conversations released by the
Colorado River Commission Monday give the public a rare opportunity to listen to
the colorful, aggressive talk of energy experts who trade wholesale power for a
living.
The river commission acknowledged that several recordings between Bill
Miller, its energy supply manager, and others during the 2000-2001 Western
energy crisis were embarrassing.
In April 2000, for instance, Miller told an unidentified person that Nevada
Power found he was creating negative imbalances by failing to buy all the power
river commission customers were going to use.
"They busted me," Miller said. "They finally figured out what
I was doing."
"Then George (Caan, executive director of the Colorado River
Commission,) had to come over and slap my hands," Miller said to John Evans
of the Southern Nevada Water Authority in a later conversation. "Don't do
that anymore. And it's like, you know, all the time winking and, you know,
bad."
Caan said Miller misstated the facts in that conversation. He said he told
Miller to stop creating negative power balances for Nevada Power and that Miller
stopped. The executive director pointed to other conversations in which Miller
correctly reported that the practice stopped.
Nevada Power contends the recordings show that the state agency helped Enron
manipulate the power market. It singled out several recordings that it says
prove the point.
In an August 2000 conversation about Nevada Power, Miller tells Paul Choi, an
Enron trader: "Those stupid pricks. I'm going to overload their system so
bad," he said.
Caan said that Miller didn't game the system on behalf of Enron, and he said
Miller stopped causing negative power imbalances for Nevada Power at his
insistence in the spring of 2000.
"The profanity is clearly unacceptable. It's completely inconsistent
with the culture of this organization and embarrassing," Caan said.
--John G. Edwards
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