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VANCOUVER -- B.C. Hydro subsidiary Powerex is one of the companies California Senator Diane Feinstein wants targeted in a U.S. criminal investigation into their roles in selling electricity to California in 2000-2001, a spokesman in Feinstein's office indicated Thursday.

Feinstein called this week for an investigation by the U.S. Justice Department after Hydro's wholly owned electricity export company and Puget Sound Energy were named in internal memos of Enron, the bankrupt U.S. energy trader.

The memos named Powerex and Puget Sound as companies for which Enron performed a strategy known as "inc-ing," or artificially increasing power demand and prices on the West Coast.

"The senator believes that the department of justice should institute a criminal investigation to determine whether federal fraud statutes, or any other statutes, were violated by Enron and other energy companies engaged in energy trading and delivery of natural gas and electricity into the western energy market in 2000-2001," Scott Gerber, a spokesman in Feinstein's office told the Vancouver Sun.

He said Feinstein would not name individual companies other than Enron, but those shown to employ the price inflation strategies "should be investigated."

White House spokesman Ari Fleischer would not say whether U.S. President George Bush supported such an inquiry.

B.C. Hydro spokeswoman Elisha Odowichuk did not know how Powerex's name wound up being included in the Enron memos, but said the company did not engage in any of the practices they describe and did not know about Enron's trading strategies. "I don't know that the call for a criminal investigation makes a difference to us," Odowichuk said. "We don't have anything to hide."

The U.S. Federal Energy Regulatory Commission wrote to 141 electricity and natural gas suppliers, including Powerex, demanding they compile affidavits admitting or denying they engaged in trading strategies described in the memos authored by Enron lawyers. They also have to submit communications between themselves and any other company that mention the trading strategies in question.

The submissions are part of a fact-finding investigation launched by the commission Feb. 13 into the possible manipulation of electric and natural gas prices. Responses are to be made as affidavits signed under oath by company presidents, CEOs or general counsel.

Those that fail to reply by May 22 could face revocation of their authority to sell wholesale electricity. B.C. Hydro said it received the notice Wednesday and will comply with the order by the deadline.

The Enron memos, which were released Monday by FERC, were dated Dec. 6, and Dec. 8, 2000 and referred to tactics described as "death star," "ricochet," "fat boy," and "inc-ing."

Inc-ing refers to falsifying the power delivery schedules submitted to the California Independent System Operator, the body responsible for managing power on the state's long-distance electricity lines.

The ISO requires power supply and demand to match at all times. Inc-ing, the memo says, involves a broker who submits a supply and demand schedule that is balanced, knowing it only has demand for half the electricity it will supply. The supplier earns a bonus for creating an artificial surplus in available power.

Vancouver energy lawyer David Austin said the consequences of the FERC investigation could include BC Hydro losing money California utilities still owe for the 2000-2001 period.

The state is seeking redress for what it considers price gouging during the power crisis of 2000-2001, when its electric utilities paid as much as $1,000 a megawatt hour at the same time British Columbians were paying $61. "You have to remember the history," Austin said. "California is furious and anything will do, thank you very much. All they need is one trade that went off-side."

California Attorney-General Bill Lockyer named Powerex in a lawsuit filed April 9, claiming it, along with three other companies, charged unjust, unreasonable and illegal rates that resulted in the state being over-charged by between $500 million US and $1 billion US. It seeks fines of $2,500 US per offence, and Lockyer alleged they involve "hundreds of thousands" of violations, meaning the potential fines could total more than $500 million US for each company named.

Hydro earned a net profit of more than $1 billion in 2001 on record revenues of $7.9 billion, up from $4.4 billion.

The suit is on top of complaints made to the U.S. Federal Energy Regulatory Commission that seek rebates of $8.9 billion US for money paid by the state to purchase energy for its utilities. Hydro representative Stephen Bruyneel said the company was surprised by the suit, but intends to vigorously defend itself. He said Powerex has always operated in good faith in the 10 years it has sold power to California.