Nevada Power’s Enron case delayed

Kevin Rademacher

Monday, March 28, 2005 | 10:42 a.m.

Nevada Power Co. will have to wait a little longer to make its Federal Energy Regulatory Commission case against disgraced energy trader Enron Corp.

Last week a judge ruled in favor of an Enron motion asking for more time to review the contents of controversial recordings that have already been examined by FERC's trial staff.

The new order pushed back the hearing date from June to "no later than Aug. 8." An initial decision now will not be due until Jan. 31, 2006.

The tapes contain conversations between Enron's traders and alleged co-conspirators executing strategies to influence the power markets, increasing Enron's profit and driving up costs for utilities, such as Nevada Power.

Carmen Cintron, an administrative law judge with the Federal Energy Regulatory Commission, had ruled in favor of a motion by FERC's trial staff to allow the tapes as evidence in a June hearing.

Enron, however, asked that Cintron reconsider the motion, claiming that it never had a chance to reply to the staff's motion. In its motion, Enron refutes a claim by FERC staff that "no party will be disadvantaged by Trial Staff's submission of this evidence since (Enron) is not due to file testimony until May 13."

Enron replied: "Staff is seriously mistaken."

In its motion, Enron claimed that once it receives the tapes from staff there will be little time left to study the contents.

"A comprehensive review of the 120,000 hours of recordings -- much less putting this material to any meaningful use -- is scarcely possible in two months," the motion said.

Enron also questioned a "sampling technique" used by staff to review the recordings, claiming that such means constitute a "targeted review" of the material.

"Although staff asserts that its sampling has been random and constitutes a representative swath of the recordings at issue, it is nonetheless plain that staff has reviewed the recordings for evidence of Enron's guilt, not of its innocence," the motion said.

The way had been cleared for Nevada Power and Sierra Pacific Power Co. of Reno to participate in the now-delayed hearing earlier this month when FERC issued a ruling that said Enron was violating market rules while it entered into contracts signed during the 2000-01 Western energy crisis.

The hearing could lead to the dismissal of $336 million in termination payments Enron has sought for canceled contracts.

"The termination payments are based on profits Enron projected to receive under its long-term, wholesale power contracts executed during a period when Enron was in violation of conditions of its market-based rate authority," the FERC ruling said. "The commission finds that these matters would benefit from a full examination at hearing."

The pending hearing follows a 2004 FERC ruling that required Enron to disgorge $32.5 million it made through improper sales involving El Paso Electric Co.'s facilities.

"Enron potentially could be required to disgorge profits for all of its wholesale power sales in the Western Interconnect for the period," said FERC financial analyst Randolph Barlow in testimony filed following the El Paso ruling.

The Nevada termination payments have, thus far, been upheld by FERC, which has cited the sanctity of contracts over any possible market manipulation. A bankruptcy court ordered the Nevada utilities to make the termination payments based on FERC's initial stance, but an appeals court remanded the case back to bankruptcy court for a rehearing, which is currently scheduled to begin April 18.