Knappster: Energy scam quietly costing Nevada taxpayers millions

By George Knapp

Maybe this story is just too darned complicated for the public to understand. Maybe our political leaders are hoping we're all too distracted by Paris Hilton's latest flame or G-Sting's newest targets to pay attention. And maybe local media types are simply unable to cram all of this financial data into their pointy little heads.

Whatever the reason, the lack of attention paid to the Colorado River Commission's recent million-dollar settlement with federal authorities is mind boggling. A state agency is coughing up a million bucks because of its hanky panky with Enron, and no one seems the least bit upset about it. No one is calling for heads to roll. No one is demanding an investigation by state officials. No one is talking about even minor discipline for those who oversaw this longstanding fiasco.

For those of you who have missed the story, here's a recap. The Colorado River Commission, which is a state agency, has been under federal investigation for almost 2 1/2 years. The Federal Energy Regulatory Commission, or FERC, has been hot on the trail of the infamous Enron Corp. for its disastrous manipulation of Western energy markets a few years ago. As part of that probe, FERC also targeted 25 other entities that were doing business with Enron. The CRC is one of those.

FERC investigators determined many months ago that Enron would never have been able to do what it did without the willing participation of its partners, including CRC. Using a variety of sneaky schemes, Enron ripped off energy customers to the tune of billions of dollars, caused rolling blackouts and brownouts, higher prices and economic turmoil in California, Nevada and other Western states. California authorities are pursuing their own legal remedies against Enron, but they too think CRC was more than a passive player in the big picture.

All the way along, CRC officials have assured Nevadans that the FERC probe is without substance, that CRC did nothing wrong, that the state had nothing to worry about. I remember a newspaper story from last year in which CRC bigwigs haughtily declared that FERC was operating on "wild assumptions," not on the basis of real evidence. CRC staffers repeatedly assured CRC board members, most of whom are elected officials, that nothing was wrong and that it would all go away soon. Obviously, it hasn't. This was made abundantly clear earlier this year when Knappster made public the audio recordings of CRC's energy trader, bragging to Enron types about how CRC was really going to screw over Nevada Power Co. and make a bunch of money in the process. Other recordings of the Enron crowd boasting about "sticking it" to grandmothers and other power customers later made news across the country. CRC execs sheepishly apologized to the CRC board about the tapes, then assured them once again that everything was just peachy.

That brings us to the million-dollar deal. CRC staffers signed the settlement with FERC and did so without even informing most board members. They agreed to pay $996,000--those are public dollars--to the feds, but they made sure they got a statement that this was not an admission of wrongdoing. No sir, no wrongdoing here. A lawyer for the CRC described the settlement as "prudent" since it would cost more to fight FERC in court. Everyone seems to have bought into the idea that this was a really swell deal for Nevada and that paying a million bucks is mere chump change.

Here's something you haven't heard elsewhere. Nearly all the other 25 entities suspected of being a partner with Enron settled their cases long ago, and they settled for far less money than did the CRC. The other public entities who partnered with Enron paid a mere pittance. The city of Redding paid $6,300. The city of Glendale paid $25,000. The Modesto Irrigation District paid $60,000. To suggest that the CRC settlement was a mere formality, an easy way to get out of this mess, is a gross distortion of the facts. (By the way, the other entities also signed deals that specified no one did anything wrong. Nosirree, no wrongdoing here by any of the 25 parties. No fines either, just payments to the government.)

Not only is the CRC paying more than the other public entities, it is paying much more than some of Enron's most notorious private partners. Reliant Energy, an Enron crony that saw some of its executives slapped with CRIMINAL indictments, had to pay $836,000 to FERC. Puget Sound Energy coughed up only $17,000. The mighty Duke Power Co. was slapped with a settlement fee (don't call it a fine) of only $549,973. The CRC wasn't exactly a passive bystander in this whole scenario. FERC believes--as do the California authorities--that the CRC handed over complete authority to Enron to make its power purchases and broker its power sales. The CRC basically gave Enron the combination to the safe, the keys to the men's room, the whole ball of wax. And the public is now paying for this generosity while being told that no one did anything wrong, we needn't worry our little furrowed noggins.

The tab for the CRC's illicit dalliance with Enron is still climbing. This FERC case may be over, but other legal matters are ongoing. That's why CRC recently approved another million dollars or so to hire high-powered private law firms to help out. CRC employees have been named in a massive federal lawsuit filed by Nevada Power, a suit the power company estimates could be worth $43 million in damages. There is also a lot of legal wrangling still to be done in California, where public and private entities are looking for their pound of flesh.

What's most amazing in all this is that there is no outrage on the part of Nevada officials. No one has stood up to say this was wrong and needs to be investigated. No one is asking that we get to the bottom of things. Other entities that broker electric power are subject to public oversight. Nevada Power, for example, answers to the PUC. Where is the oversight of the CRC? Who holds this bunch responsible? And where the hell are the board members who presumably should know what is going on within an agency they are supposed to manage?

Revenge of the bureaucrats?

Barbara Orcutt, the owner of the Mt. Charleston Lodge and an outspoken critic of the public agencies that are supposed to take care of the mountain, thinks she is being singled out by federal authorities because she has dared to speak up. Orcutt has appeared in TV news reports and in the pages of the Mercury talking about the failure of federal agencies, in particular the U.S. Forest Service, to provide even minimum services for the 3 million people who visit the Mount Charleston area each year.

For her efforts to help residents and visitors, Orcutt says she has been put on notice by the feds that she will no longer be allowed to offer horseback rides on her property, nor will she be allowed to provide sleigh rides during snowy winter months. Orcutt says she also was given notice by the Forest Service that she is under criminal investigation, although it is unclear at this time just what laws she has allegedly broken. Maybe it isn't retaliation for her very public criticism of the Forest Service, but the timing sure looks suspicious.

Needless to say, we plan to get to the bottom of this.

Names, faces, places

The owners of the popular Ice nightclub reportedly cleaned house this week. Informed sources say the owners are convinced that some of the club's managers and employees have been embezzling large sums of money, perhaps as much as $400,000. Interestingly, though, the police had not been called as of the time this is being written. For the past month, a TV crew has been camped out at Ice, taping everything that happens at the club for yet another reality show, to be aired on the Spike Network. Cameras were rolling when the managers came to work Monday morning and were fired, one by one, on the spot. Could it be a stunt for the TV show, or a genuine accounting problem? Stay tuned. ... Horndog locals have been cruising their cars past the convention center this week, hoping to score with attractive models. Tens of thousands of fashion industry folks are in town for a clothing industry event, which means there are plenty of good-looking models walking in the vicinity of the convention center. That has brought out carloads of howling, whistling goofballs who think they have a shot of picking up the models as they walk to and from the convention. They don't, of course, and their presence does little to help the ridiculous traffic congestion in the area. ... Another group in town this week consists of the Riley High School Epsilons from South Bend, Ind., here for their 50th high school reunion. Knappster has it on good authority that Epsilons Shirley Rosbrugh, Mary Ann Kuzmic, Rita Keiser, Nancy Herkenroder and others will reprent their school colors of purple and gold by painting the town red. ... Say, can readers help me come up with a name for a major league baseball team? Let's just presume that the team would be based in Green Valley. For the sake of discussion, maybe it could be called the Green Valley Greenbacks. Seriously, Knappster is soliciting suggested names for a team. You'll find out why.