Nevada delegation seeks FERC Enron hearing

Sandra Chereb

Friday, April 30, 2004 | 10:52 a.m.

Nevada's three U.S. House members are pressing federal regulators to determine whether the state's utilities should be liable for $330 million in power purchased but never delivered by Enron Corp. during the 2001 energy crisis.

In a letter to the Federal Regulatory Energy Commission, Reps. Jim Gibbons, Jon Porter and Shelley Berkley said the commission has allowed Enron "to profit at the expense of Nevada's families" by not holding a hearing into the bankruptcy of the Houston-based energy trader's actions.

The letter noted that the state attorney general's office, Nevada Public Service Commission and Sens. Harry Reid and John Ensign also have urged intervention by the federal regulatory agency.

"This issue is absolutely critical to the future of the state's utilities and its ratepayers and has now been pending before you for approximately six months without any action," the Congress members wrote.

The commission "should conduct a hearing before allowing Enron to collect another nickel from the people of Nevada, let alone $330 million, given the circumstances involved in this matter," they said.

Enron filed for Chapter 11 bankruptcy protection in December 2001. The judge in that case has ruled that Nevada's two electric utilities, Nevada Power and Sierra Pacific Power, are responsible for high-priced power contracts they signed with Enron during the Western energy crisis that year.

The Nevada utilities contend Enron manipulated the energy market and gouged them with contracts signed when prices were highest.

But the power was never delivered. Enron pulled the plug on the deals after state regulators refused to allow Nevada Power to recover the cost of the contracts from ratepayers and Sierra Pacific's credit was downgraded.

In September 2003, U.S. Bankruptcy Judge Arthur Gonzalez sided with Enron lawyers who argued the two utilities were still liable for the contracts.

The companies have put a combined $60 million into an escrow account pending appeal of the judgment.