Nevada Power hits obstacle in struggle with Enron Corp.

Kevin Rademacher

Friday, Dec. 3, 2004 | 11:10 a.m.

Nevada Power Co.'s efforts to wipe away a $336 million judgment in favor of Enron Corp. have hit another snag.

New York Bankruptcy Court Judge Arthur Gonzalez on Thursday granted a motion by Enron, the notorious Texas energy trader, to prohibit the Nevada utility from taking an appeal of the massive judgment to the Federal Energy Regulatory Commission.

Federal regulators were scheduled to hear the appeal on Dec. 13. That proceeding is now scrapped.

"We are reviewing our options, which include an appeal," said Jack Leone, a Nevada Power spokesman.

Gonzalez, who ordered Nevada Power and its sister utility, Sierra Pacific Power Co. of Reno, to make the $336 million payment to Enron in 2003, said a FERC hearing would be duplicative of proceedings in his court.

In October an appeals court judge set aside Gonzalez's original ruling because it failed to account for several facts of the case called into question by the Nevada companies. The appeals court ordered Gonzalez to hold a trial to more fully review the fact. No timetable has been set in that retrial, said Russ Campbell, an attorney for the Nevada utilities.

Campbell said the delay is not a defeat.

"Really all it is is a timeout in the game," he said, adding that the stall tactics are typical of Enron's strategy.

"Our experience with Enron is that they are going to do everything they can to throw out an anchor and stall justice," Campbell said. "We will litigate this somewhere."

Nevada Consumer Advocate Tim Hay said Gonzalez's order was not totally unexpected.

"I'm not terribly surprised," he said. "I think the court is probably protecting its jurisdiction."

The utilities entered into power-buying contracts with Enron during the Western energy crisis of 2000-01. Enron canceled the deals in 2002 after the Nevada utilities had their credit cut to junk status amid fallout from the crisis.

Enron subsequently demanded millions of dollars in termination payments from the utilities despite the fact that most of the power was never delivered.

Utility executives -- and FERC staff -- later said the contracts were tainted because of market manipulation on the part of Enron and others. Still, in June 2003 FERC upheld the contracts.

Two months later, despite pleadings from the utilities, Gonzalez ruled that -- based on the FERC decision -- Nevada Power and Sierra Pacific Power must pay Enron the $336 million.