River commission to pay $1 million settlement

Kevin Rademacher

Friday, Aug. 27, 2004 | 10:32 a.m.

The Colorado River Commission will pay nearly $1 million to settle a Federal Energy Regulatory Commission investigation into the agency's trading practices and association with Enron Corp. during the Western energy crisis.

The settlement, filed with the FERC on Thursday, includes no admission or finding of wrongdoing, and CRC executives said the settlement was reached in an effort to save the cost necessary to continue litigating the matter.

"We view this as a sound business decision," said Jim Salo, special assistant to the director of the CRC.

The $996,145 payment represents the revenue the CRC received through trades involving Enron. Those trades involved sales into the California power market during 2000-01. Salo said there was no conspiracy with Enron, and that the notorious power trader was involved merely as a conduit with the market authority to trade in California.

"We totally deny there was any kind of conspiracy," he said. "We faced a new interpretation of the rules that was different than the interpretation at that time."

Ultimately, the payment to FERC will come from the Southern Nevada Water Authority, which receives power from the CRC to run its pumps.

"I think it's a practical solution to a very complicated and technical issue," said Vince Alberta, spokesman for the water authority. "The Colorado River Commission has saved more money for Nevada consumers than the amount of this settlement."

Alberta added that the settlement amount is not expected to have any impact on water rates.

While the FERC issue may be settled, the CRC still faces a federal lawsuit from Nevada Power Co. alleging that the CRC and Enron conspired to damage the electric company.

As part of its participation in the FERC case, Nevada Power uncovered tapes of CRC and Enron traders making crude remarks about driving up power prices. The CRC described the remarks as "trash talk" that was not backed up by improper actions. The electric company said it was evidence of a conspiracy.

Nevada Power President Pat Shalmy said the settlement furthers that lawsuit.

"Obviously, we see this as a signal of wrongdoing on the part of the CRC," he said.

Salo disagreed.

"It says, on its face, there is no admission or finding of any wrongdoing," he said.