Connecticut attorney general releases trash-authority memos
By The Associated Press
10.18.02
HARTFORD, Conn. — State trash-authority officials sought new sources of financing shortly after a deal with the bankrupt energy giant Enron Corp. collapsed last year, according to a memo released yesterday by state Attorney General Richard Blumenthal.
Blumenthal released eight memos that were the subject of a Freedom of Information request by the Journal Inquirer of Manchester after deciding their release would not undermine a lawsuit to recover $220 million lost in a deal between the Connecticut Resources Recovery Authority and Enron.
"There is no danger that the release of the documents will damage our ability to recover the money," Blumenthal said.
Robert E. Wright, then president of the trash agency that serves 70 towns, discussed ways to refinance the project's debt in a Jan. 2 memo to Peter Ellef, who was serving as chairman of CRRA and Gov. John G. Rowland's chief of staff.
CRRA and Enron signed a deal in December 2000 in which the authority gave Enron $220 million in exchange for an agreement by Enron to pay the authority $26.4 million a year for power from a Hartford trash-to-energy plant. Enron was to sell the power, but the deal failed when Enron filed for bankruptcy in December 2001.
Refinancing debt could have saved the project between $8 million and $12 million a year, Wright wrote.
State Treasurer Denise Nappier "has suggested she may base her decision on whether to approve a refinancing on `political' considerations," he wrote. "However, if a refinancing will save towns millions of dollars, she will be at risk turning down such a plan, particularly during an election year."
Howard Rifkin, deputy treasurer, said Nappier did not make the comment. He said he suggested that refinancing not be considered without first discussing it with Rowland and legislative leaders.
The debt was not refinanced.
Wright wrote that the "best hope" for remarketing the energy would be to sell its renewable resource power to Connecticut Light & Power at a standard residential rate.
CL&P could request a 1 cent per kilowatt hour increase, which would generate $4.5 million for the CRRA-Enron project, he said.
DPUC rejected the increase, said Beryl Lyons, spokeswoman for the state Department of Public Utility Control.
In an undated memo to Kathleen O'Connor, Rowland's deputy legal counsel, Wright said the annual loss to CRRA would be more than $26 million if a bankruptcy court rejected the state's claim for the money lost in the CRRA-Enron transaction.
If the loss is not made up, disposal fees would "rise dramatically and severely strain budgets" for the 70 towns, Wright said.
The CRRA board increased trash-disposal fees charged to the towns, though an initial plan to increase tipping fees by $16 per ton was scaled back to a $6 increase after vehement protests from municipal officials.
Blumenthal said Wright and Ellef have been less than helpful in his investigation. The attorney general has insisted that the CRRA-Enron deal was an illegal loan.
"I would not characterize Ellef or Wright as cooperating witnesses at this point," he said.
Messages seeking comment were left for Wright and Ellef.
Blumenthal said Rowland has been "cooperative and forthcoming from the start."
Rowland's chief of staff, Dean Pagani, who has taken a leave of absence to serve as the governor's campaign spokesman, this month asked CRRA to release the documents. Rowland said he could not order the release because the CRRA is a quasi-public agency run by its own board of directors. The governor has released one of the memos, which a spokesman said had been discovered in another file.
Bill Curry, Rowland's Democratic challenger, criticized the governor yesterday for backing fellow Republicans in the Legislature in their refusal to sign onto a call by Democrats for hearings into the CRRA-Enron deal.
Michael Pace, chairman of CRRA, said at yesterday's news conference that CRRA's resistance to releasing the memos was the policy of its previous board of directors. Officials were concerned that other internal memos would be opened to the public.
But he said he determined the disclosure "is important to build public trust one more time."
The Freedom of Information Commission had backed CRRA's refusal to release the documents. It cited attorney-client privilege in seven instances and said the eighth involved pending court cases.