Energy giant admits manipulating markets

Tuesday, May 14, 2002 | 11:03 a.m.

HOUSTON -- Reliant Resources Inc., one of the United States' biggest electricity traders, said Monday that it had conducted fake transactions with four power companies that inflated its revenues by 10 percent over the last three years.

The disclosure follows an announcement late last week by Dynegy Corp. that it, too, had conducted such deals, called "round-trip" or "wash" trades. The other party in the Dynegy trades and in many of the Reliant trades was CMS Energy of Dearborn, Mich.

Monday's disclosures sent Reliant's share price plummeting $2.06, to $9.94. Dynegy's stock slid 57 cents to $9.31, and CMS shares fell $3.24 to $16.05. The news of the trades unsettled a market already skeptical about the integrity of the power trading sector, thanks to the fall of Enron and alleged price manipulation in California.

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