‘Witch hunt’ by regulators hits energy investor confidence

Speaking at sister publication Energy & Power Risk Management’s annual North American congress in Houston today, Cliff Hare, president of energy trading at Dynegy, said: “We see the current situation as a witch hunt in light of the Enron collapse. It’s an unfortunate word but that’s the way it looks.”

Hare added that the way Dynegy could reinvigorate investor confidence is to co-operate with the Federal Energy Regulatory Commission and the SEC. “This is a strong and important industry,” he said. “It is prudent that allegations of wrongdoing are investigated and correct that answers are found, but this should not interfere with Dynegy and the rest of the energy industry doing the business we are here to do.”

On May 10, both Dynegy and Michigan-based energy company CMS Energy agreed to co-operate with SEC inquiries into the suspected act of buying and selling power simultaneously with each other to inflate trading volumes.

The SEC’s investigation into Dynegy’s allegedly volume-inflating trading practices has also proved cause for investor concern, but is not the only example in the market. Houston-based Reliant Energy admitted to the market on the same day that it too had bought and sold power simultaneously with an unnamed partner. The company, already under Ferc investigation for possibly illegal trading practices during the California power drought of 2000/1, has also seen its share price tumble. Reliant Energy shares were down $3.86 to $17.59 on Monday May 13 – a fall of 18%.