Nevada Power: E-mail shows Enron exploited contracts

Kevin Rademacher

Wednesday, Feb. 11, 2004 | 11:10 a.m.

Nevada Power Co. on Tuesday filed a new motion in its effort to persuade federal regulators to overturn a $338 million bankruptcy court judgment against Enron Corp.

The Las Vegas utility, along with Sierra Pacific Power Co. of Reno, argued in the new motion that recent court decisions make it clear that the Federal Energy Regulatory Commission has jurisdiction over power contracts signed in the Western Systems Power Pool.

In October, the utilities appealed to FERC to set aside a judgment from a New York bankruptcy court judge upholding disputed contracts signed during the Western energy crisis and later terminated by Enron. The $338 million represents termination payments Enron claims it is entitled to under the contract provision.

The new motion also claims that Enron was manipulating the termination clause in many contracts in an effort to generate cash flow. The motion said that Enron is involved in more than $1.5 billion in termination-related disputed with dozens of companies.

The motion includes an e-mail -- allegedly sent by an Enron employee to colleagues -- spelling out a strategy for getting out of long-term contracts. The e-mail lists a series of negative post-bankruptcy options apparently designed to push contract holders into settlement talks.

"After bankruptcy we have a number of options that all favor us and all potentially hurt them," said the e-mail, allegedly authored by Christian Yoder, an Enron employee.

One of the options said: "The (bankruptcy) trustee can elect to terminate and enforce the two-way payments."

About six months after Enron filed for bankruptcy, it terminated the contracts with the Nevada utilities.

"Let's gear up our efforts and try to drag money in," the e-mail closed.

Roger Berliner, an attorney representing Nevada Power in the FERC case, said the company is confident in its argument.

"We believe we are right as a matter of law," he said. "Ultimately, we think that matters."