Utilities lose round against Enron

Kevin Rademacher

Thursday, April 21, 2005 | 10:39 a.m.

A federal judge has affirmed a portion of a March 2004 U.S. Bankruptcy Court decision that ordered Nevada Power Co. of Las Vegas and Sierra Pacific Power Co. of Reno to pay Enron Corp. $336 million, but the legal battle is far from over.

The termination payments ordered were related to power contracts signed during the Western energy crisis and later terminated by Enron.

The Nevada utilities had appealed to the U.S. District Court in New York the decision of Bankruptcy Court Judge Arthur Gonzalez, arguing that the bankruptcy court lacked the jurisdiction to set aside their claims.

U.S. District Court Judge Barbara S. Jones last week rejected that argument, but four other appeals on the matter remain before her. The most significant could be an argument that Gonzalez erred when he enjoined the Nevada companies from appealing contract issues directly to the Federal Energy Regulatory Commission.

A ruling in favor of the Nevada companies on the detail could shift a May 23 bankruptcy court rehearing to FERC.

The Nevada companies also are involved in a FERC case scheduled for Sept. 7 in which several entities will argue that their contracts with FERC should be set aside because Enron was violating market rules when it entered into the deals.