Energy Trading Rules Stiffened

WASHINGTON — The Federal Energy Regulatory Commission on Thursday issued rules to prevent a repeat of the kind of massive market manipulation by Enron Corp. and others during the 2000-01 energy crisis that ravaged California and other Western states.

The rules, which Congress authorized FERC to issue as part of a $14.5-billion energy bill passed last year, ban “any manipulative or deceptive device or contrivance” in the U.S. wholesale natural gas and electricity markets. The rules apply to all entities, not just public utilities and natural gas companies, the commission said.

“I think [the rules] will fundamentally change the way the commission reviews markets,” Chairman Joseph Kelliher said. “We are in a much better position than we were five years ago.”

Manipulation during the Western power crisis by Houston-based Enron caught the commission unprepared, Commissioner Nora Brownell said.

“We were not armed with the tools we needed to effectively get the job done,” Brownell said.

The federal commission now can levy civil penalties of $1 million per day per violation. The agency will hire an unspecified number of employees to enforce the new manipulation rules, Kelliher said.

FERC recently said it had ended all but one of the 60 investigations it launched into market manipulation during the energy crisis, and oversaw settlements totaling more than $6.3 billion.