Letter links Lay to federal energy regulator
"Wood received his appointment to the Federal
Energy Regulatory Commission, FERC, from
President Bush last year after Lay gave Vice
President Dick Cheney a list of people he wanted
appointed to the agency. "
Feb. 6, 2002, 9:19PM
By R.G. RATCLIFFE
Copyright 2002 Houston Chronicle Austin Bureau
AUSTIN -- Former Enron Corp. Chairman Ken Lay's
patronage of federal energy regulator Pat Wood
apparently began in 1994, according to a letter
released Wednesday by Gov. Rick Perry's office
.
Lay's connections to Wood have been controversial
since Enron's financial collapse last year.
Wood received his appointment to the Federal
Energy Regulatory Commission, FERC, from
President Bush last year after Lay gave Vice
President Dick Cheney a list of people he wanted
appointed to the agency.
Enron at the time was trying to use FERC policy
to open up electric markets in the Southeast.
Wood's name was on the list Lay gave Cheney,
and after being appointed to the commission
Wood rose to chairman.
The letter released Wednesday showed this is not the
first time Lay asked Bush to appoint Wood to a
government job that might benefit Enron.
The Dec. 21, 1994, letter from Lay to then
Gov.-elect Bush urged Bush to appoint Wood
to the Texas Public Utility Commission -- an agency
that Wood chaired when he worked with Enron and
other utilities to deregulate electricity in Texas.
At the time of Wood's appointment to the PUC,
he was a relatively unknown lawyer working for
Texas Railroad Commission Chairman Barry Williamson.
Lay in the letter said a recommendation for Wood's
appointment to the PUC had been made by "Rich"
to Bush's appointments director, Clay Johnson,
and political adviser, Karl Rove.
The letter did not reveal who Rich was, but Richard
Kinder was the president and chief operating officer
of Enron at the time. Kinder left the firm in 1996.
"The Public Utility Commission appointment is an
extremely critical one for the whole state," Lay
wrote Bush.
"If Texas is to achieve the economic growth that you
and all of us hope for, it is essential that we achieve
maximum efficiency within the public utility sector,"
Lay wrote. "This can only be done through the infusion
of innovation and competition."
Lay went on to say that this would require "new thinking"
and said Wood "is best qualified to provide that new thinking."
Bush appointed Wood to the utility commission two months
later. Wood's appointment to the FERC occurred last year as
Enron was trying to open up electric transmission lines in the
Southeast. Wood pushed for new regional energy councils that
would overstep state electric regulatory agencies.
Wood last week announced an investigation into
whether Enron prolonged California's energy crisis
last year by unfairly manipulating wholesale power prices.
Wood's boss at the state railroad commission, former
commissioner Barry Williamson, said despite the letter,
Lay played no substantial role in getting Wood his PUC job.
Williamson said he recommended Wood to Bush in
November 1994 shortly after Bush won election
as governor
.
He said that recommendation was backed up by former
FERC Chairman Martin Allday and former FERC
Commissioner Jerry Langdon. Allday and Langdon,
old Bush family friends from Midland, had known Wood
when he was a lawyer at FERC, Williamson said.
Williamson said the only reason Lay wanted Wood
on the utility commission was because Wood was
helping Williamson work to open up gas transmission
lines to competition.
"Enron violently opposed that. They had a system
they dominated, and they wanted to keep it," he said.
Williamson said Enron officials wanted Wood out of
the railroad commission, which regulates oil and gas,
to remove him from the pipeline fight.
Williamson said he did not believe Enron had
yet become interested in electric deregulation at
the time of Wood's appointment to the PUC, which
regulates electric companies.
He said that while Enron opposed competition in the
gas pipeline industry, the company later supported
competition in the emerging deregulated electric industry.
Williamson said Wood was a candidate for appointment to
either the Federal Communications Commission or the FERC
from the day Bush took office as president. He said Lay's list
made no difference in Wood's FERC appointment.
"The only thing that happened was Ken Lay promoting
himself," Williamson said. "He's always there for the victory
celebration."
The same Lay letter to Bush recommending Wood to the
PUC also asked him to name John Duncan of Houston
for an appointment to the University of Texas board of
regents. Bush never made such an appointment.
Another Lay request for an appointment was one he made
to Perry in December 2000, immediately after Perry took
office following Bush's resignation to become president.
Lay endorsed the recommendation of a retired Arthur
Andersen executive to serve on the Texas State Board
of Public Accountancy -- the state agency that licenses and regulates
accountants. In the letter, Lay said he had learned of the
recommended appointment from "the head of Arthur
Andersen here in Houston."
Perry in May 2001 received a letter of recommendation
for the appointment from D. Stephen Goddard Jr., the managing
partner of Andersen's Houston office. That office has been implicated in Enron's failure.
Perry did not appoint the retired Andersen executive to the
accountancy board. But Perry did make the controversial
appointment of former Enron executive Max Yzaguirre to
replace Wood. Yzaguirre resigned last month over questions of
whether he was qualified to serve on an agency regulating some of Enron's activities.
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