In the first charges involving Enron’s suspected rigging of the California energy market, a former Enron executive pleaded guilty Thursday to scheming with others to jack up electricity prices during the state’s power crisis.
Timothy Belden, former director of Enron’s California and Western trading operations from 1997 to early 2002, pleaded guilty in federal court here to one count of conspiring to commit wire fraud.
Belden and others allegedly engaged in fraudulent trading that contributed to a run-up of wholesale electricity prices to $1,500 a megawatt hour from $40 a megawatt hour during the California power crisis in 2000 and 2001. California and utility firms paid $9 billion more for power than they should have in that period, according to a criminal complaint filed by the Justice Department (news – web sites)’s Enron task force.
Additional energy-industry traders and executives suspected of rigging the California energy market are expected to face criminal charges, say legal experts close to the case.
”This is the first domino to fall,” says California state Sen. Joseph Dunn, whose committee is investigating the energy crisis.
A federal grand jury in San Francisco, federal regulators and the California attorney general’s office also are investigating the state’s power market. Belden and others submitted false trading information and bids to California officials who ran the state’s power market and electricity grid, the complaint alleges. Other potential defendants were not named.
Revenue at Enron’s electricity trading unit jumped to $1.3 billion in 2000 and 2001, mostly from higher prices and the fraudulent trades, the complaint alleges. Enron sold the unit to investment firm UBS Warburg earlier this year.
”Why did you do it?” U.S. District Judge Martin Jenkins asked Belden. He replied softly, ”Because I was trying to maximize profit for Enron.”
In a plea deal, Belden agreed to return $2.1 million in compensation for the trading. Prosecutor Matthew Jacobs said the 35-year-old Belden will cooperate with all investigations into Enron.
Released on $500,000 bail, Belden faces five years in prison, a $250,000 fine and three years probation.