Money can't buy happiness but it sure can buy energy policy!
Feb. 6, 2002, 9:19PM
Letter links Lay to federal energy regulator
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.
chron.com
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