Senators chastise FERC on Enron, Nevada Power dispute

Kevin Rademacher

Thursday, Feb. 26, 2004 | 11:12 a.m.

Nevada's U.S. senators on Wednesday criticized the Federal Energy Regulatory Commission's handling of a dispute between bankrupt Enron Corp. and Nevada Power Co. and Nevada Power's Reno-based sister company.

The Las Vegas utility, along with Sierra Pacific Power Co. of Reno, have asked the commission to review Enron's tactics in terminating power contracts and demanding more than $300 million in termination payments.

If the ruling is overturned, the utilities could possibly be released from a $338 million judgment in favor of Enron handed down by a U.S. Bankruptcy Court judge last year.

In their letter to the commission, however, Democrat Harry Reid and Republican John Ensign point out that four months have passed since the Nevada companies asked for the review. FERC has yet to respond.

"We write to express our serious concerns that the commission is failing to protect Nevada ratepayers," the letter said.

In an effort to spark a response, the utilities this month filed a new motion in the case, arguing that recent court decisions make it clear that FERC has jurisdiction over power contracts signed in the Western Systems Power Pool.

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 disputes with dozens of companies.

"When given the choice to provide some protection against Enron's unlawful acts, the commission has repeatedly refused to do so," the Senators' letter said. "Even here, where the commission has significant evidence that Enron has manipulated the termination provisions of the tariffs as much as it has manipulated the market previously, the commission has refused to act."

Also on Wednesday, the Public Utilities Commission of Nevada and the state Bureau of Consumer Protection also filed statements with FERC in support of the Nevada utilities' arguments.

"We continue to discover new evidence of how our customers and our company have been harmed and truly appreciate the ongoing efforts of Sen. Reid and Sen. Ensign as well the Public Utilities Commission and the Bureau of Consumer Protection to implore the FERC to act on behalf of those who have been victimized by Enron and others," Walt Higgins, chief executive of Sierra Pacific Resources, parent company of Nevada Power and Sierra Pacific Power, said in a statement this morning.