Nevadans to receive tens of millions in energy settlement

Kevin Rademacher and Cy Ryan

Friday, March 21, 2003 | 11:22 a.m.

Nevada consumers could receive as much as $65 million from El Paso Corp.'s settlement of claims that it manipulated natural gas prices during the West's energy crisis.

The $1.69 billion deal resolves claims arising from the the sale and delivery of natural gas and electricity to California, Nevada, Oregon and Washington since 1996, El Paso said Thursday.

The deal "is a good victory for the consumer," Nevada Consumer Advocate Tim Hay said.

Similar claims are pending against Sempra Energy, Hay said. That supplier also sold gas to Southern Nevada. A victory in that case would also produce refunds for Nevada consumers, he said.

The recent settlement is the latest development in the aftermath of the energy crisis that peaked in the summer of 2001.

Nevada Power Co. has complaints pending against eight power suppliers, alleging that the companies took advantage of the chaotic Western power market and overcharged for long-term energy contracts, according to the state Public Utilities Commission. Those complaints will be decided by the Federal Energy Regulatory Commission.

Claims are pending against Enron Power Marketing, Mirant Americas, Reliant Energy, BP Energy, Allegheny Energy Supply, American Electric Power Services and Morgan Stanley.

Nevada Power withdrew a complaint against Duke Energy last year.

Both commercial and residential customers will be in line for the El Paso refunds, which in Nevada could total between $52 million and $65 million, Hay said today. The calculation of those refunds will take time, he added.

While some of the money will be paid up front by El Paso, the balance will be distributed over 20 years.

In addition to cash and stock payments, El Paso has agreed to antitrust training for its employees, Hay said. That part of the settlement was important to "prevent abuses in the future," Hay said.

Roger Buehrer, a spokesman for Southwest Gas Corp. of Las Vegas, the state's natural gas utility, said the implications of the deal on that company were unknown this morning. Southwest Gas was not a party to settlement talks, he said. The deal must be approved by the Federal Energy Regulatory Commission before it is final, he added

The deal is less than the $3.7 billion in rebates on gas and power purchases California had sought, which some investors said would have bankrupted El Paso. The company, after losses in energy trading, targeted $3.4 billion in asset sales this year, cut its dividend and shed jobs to reduce $25 billion of debt.

Officials said the Texas-based company's attempts to drive up gas prices also boosted electricity prices, because much of the West's electricity comes from gas-burning power plants.

Bloomberg News

contributed to this report.