Jurisdiction decided in part of Enron suit

Friday, Nov. 15, 2002 | 10:28 a.m.

A federal bankruptcy judge ruled Thursday that he has jurisdiction over at least part of a lawsuit an Enron Corp. subsidiary filed against Nevada Power Co. involving a terminated energy contract.

U.S. Bankruptcy Judge Arthur Gonzalez of the Southern District of New York has scheduled a Dec. 12 hearing to take further testimony, Nevada Power spokesman Jack Leone said.

Enron Power Marketing Inc. of Houston is seeking $309 million from Nevada Power and Sierra Pacific Power Co. of Reno, both subsidiaries of Sierra Pacific Resources. Enron Power had provided energy to the two Nevada utilities but terminated its contract in May, citing the poor credit ratings of Nevada Power and Sierra Pacific Power.

Much of what Enron Power is seeking represents the difference between wholesale market prices through the summer and what the Nevada utilities would have had to pay had the contract not been terminated. Sierra Pacific Resources, which obtained energy from other sources last summer to replace that contract, has argued that it doesn't owe Enron any money.

Sierra Pacific, in a quarterly financial report filed Thursday with the Securities and Exchange Commission, stated that a judgment against the company would adversely affect its financial condition and render Nevada Power's ability to "continue to operate outside of bankruptcy uncertain."

Gonzalez ruled Thursday that he has jurisdiction to consider at least $22 million in the lawsuit because that amount represents power that was already delivered to the Nevada utilities, Leone said.

Gonzalez also determined he would take separate testimony on Dec. 12 to consider a motion by Nevada Power and Sierra Pacific Power to have the balance of the lawsuit transferred to the jurisdiction of the Federal Energy Regulatory Commission.

Federal regulators are scheduled to issue a preliminary ruling on Dec. 22 on Sierra Pacific's request for federal review of power contracts it obtained from Enron Power and nine other power generators and energy trading companies. Sierra Pacific has maintained that it was pressured into paying high prices for energy in 2000 and 2001 because of the Western power crisis.

A former Enron trader pleaded guilty last month to conspiracy charges connected with allegations that his company helped manipulate California's energy market.