Nevada utilities make move in Enron fight over contracts

Kevin Rademacher

Wednesday, Aug. 11, 2004 | 10:49 a.m.

Nevada Power Co. and its Reno-based sister utility, Sierra Pacific Power Co., on Tuesday filed a legal response to Enron Corp.'s latest move to secure more than $300 million from the companies for power never delivered.

In a filing in U.S. District Court in New York, the utilities claimed that the energy trader's move to block their appeal of contract termination payments is flawed.

Last month, the Federal Energy Regulatory Commission granted the Nevada utilities' request for a rehearing of its decision to uphold contracts with Enron despite findings of market manipulation.

Enron canceled the contracts in 2002 when the utilities' credit was downgraded amid the fallout from the Western energy crisis. Enron then demanded $336 million in termination payments, a move upheld by a U.S. Bankruptcy Court judge presiding over the energy trader's reorganization. That judge ruled that only FERC had the authority to set aside the payments.

Last week, responding to an Enron filing, a federal judge in New York ordered hearings for Friday on Enron's motion to block the FERC appeal, claiming the the termination payment issue had been decided by the bankruptcy court ruling.

The Nevada utilities' response said the court has no jurisdiction to block a federal agency.

"This tactic is transparently improper," the utilities' motion said.

The motion also blasts Enron's continued efforts to recover the proceeds from its efforts to manipulate the power markets.

"(Enron) continues to trivialize its wrongs, to mock the federal regulators who seek remedies, and to accuse those who seek relief of 'disrespect.' "

Nevada Consumer Advocate Tim Hay said he is preparing to attend Friday's hearing to represent the state attorney general's office.