Possible Q's for Hearing

Here are possible Q's. Dan W. will prepare first cut at answers.

Questions for January 31 Hearing

Price Gouging
? On January 22, your company reported fourth-quarter results for
2000, in which you showed that profits from your energy trading unit rose
256 percent and your overall earnings rose 34 percent. How much of this was
attributable to increased sales in California? How much did you make from
sales in California?
? What is the highest per kilowatt-hour price Enron charged on the
spot market? What is the cost of production for that power?
? In a recent Houston Chronicle article (January 23, 2001), Mr.
Skilling, your CEO was quoted as saying that not only had the California
situation not had an impact on earnings, but that "it may even turn out to
be a benefit in the long run." Can you please explain the long-term
benefits you expect?
? In a recent New York Times column by Paul Krugman, Ken Lay was
quoted as saying that California consumers "need to see the price signals
that is, pay much more and start modifying behavior to reduce demand until
we get more supplies." What did Mr. Lay mean by this? With the tremendous
profits that Enron is making in this situation, isn't it pretty brazen for
him to be suggesting that California consumers should pay more for their
power?

Market Manipulation
? A number of generators and wholesalers, including Enron, have been
accused of withholding energy to drive up energy prices in the Western
states. I understand that you are being sued in state court in San
Francisco for such activities and an independent monitor has supported these
allegations. Does Enron currently have any generation assets off-line for
maintenance? Did Enron make all of its generated power in the Western
states available for purchase by California utilities? If not, why did it
withhold power? How much did you withhold or sell in other states despite
knowing of the crisis in California?
? At the time that the spot market collapsed and two of California's
largest utilities were teetering on the verge of bankruptcy, what price was
Enron asking for its power on the spot market? What was Enron's cost of
producing that power? How much profit did you make in December from sales
in California?
? Did Enron ever refuse to sell power to a California utility because
of concerns about their credit worthiness? Did your company ever tell
California utilities that it would not sell power to them because of credit
concerns?
? Do you believe that Enron has any responsibility as a corporation in
a crisis such as occurred in California? How do you justify making such
large profits, driving the utilities into bankruptcy and then refusing to
sell power to those same utilities because of their credit worthiness?

Utility Forbearance & Auction
? California clearly has a significant problem with the potential
bankruptcy of two of its largest utilities. How much money do those
utilities owe your company? Has your company offered any payment
forbearance or forgiveness in light of the excessive prices that you were
charging them on the spot market for power?
? California held an Internet auction last week for long-term
contracts for sale of power to the state. Did Enron participate in the
auction? What price did you offer for power in non-peak times? What price
did you bid for power during peaking periods?
? Your company has successfully gouged the utilities in California for
power on the spot market because long-term contracts were discouraged. Now,
you are looking to enter into long-term contracts, which many experts
believe will be at rates far above the market in the future. You really are
going to profit coming and going. How can you claim that you are not price
gouging in this case?
? In the past, you have offered power to California utilities in
long-term contracts at rates less than $.06 per kilowatt-hour. How do you
justify previously offering power at much lower rates and now saying that
you are unable to provide it for less than a much higher price?

Role in California Deregulation
? Your company was supportive of the California deregulation efforts
and has been a leading supporter of deregulation nationwide. In light of
the "colossal failure" of the effort in California, do you still support
deregulation in other states or at the federal level? What safeguards would
you support to protect against increased rates for consumers?

The Future
? California is likely to enact a legislative fix to address this
problem. What do you think will happen this summer during peak demand
periods? Is there another crisis in the making in California or in other
states such as New York?

Political Contributions & Activities
? Your company has been very active politically and according to press
reports, Mr. Lay is very close to President Bush. Wasn't your company one
of the biggest donors to the Bush Campaign and the Inaugural Committee? How
much money did your company contribute in soft money to the Bush Campaign
and the RNC? How much money did your executives give in personal money to
the Bush Campaign and the RNC? How much to the inaugural?
? Has anyone from Enron participated in the Bush transition teams or
the so-called "advisory committees?"
? What information and suggestions has your company or its officials
provided to the transition team or the new Administration regarding energy
deregulation or the California situation?
? What discussions have officials from your company had with
Administration or Transition officials about the California situation?

Softball Questions

? In the short term and then in the long term, what can California do
to fix its power supply system?
? What do you believe are the flaws in the current California system?
The Power Exchange? The Independent System Operator?
? Why did deregulation fail in California?
? Some people, including Governor Davis, have suggested that
out-of-state power suppliers, such as Enron, are to blame for this crisis,
is that true?
? Some people in California have suggested that the State should take
over the power system. Please comment on this proposal. Is this a good
idea?
? In which states has deregulation worked? How do you explain the
success in those states in contrast with the failures in California?
? This Committee will likely consider deregulation legislation at some
point in the future. Should we undertake this effort?