Friday, May 20, 2005 | 11:06 a.m.
An amendment has been added to a federal energy bill that could eventually release the state's largest electric companies from more than $330 million payments to disgraced energy trader Enron Corp.
Enron claims that Nevada Power Co. of Las Vegas and Sierra Pacific Power Co. of Reno owe $336 million in termination payment for cancelled contracts that were originally signed during the Western energy crisis. In July 2003, a U.S. Bankruptcy Court judge ruled in favor of Enron just months after the Federal Energy Regulatory Commission said that, despite findings of market manipulation on the part of Enron and others, the long-term contracts were valid.
The utilities have since been fighting on several legal and regulatory fronts, and in October an appeals court vacated the bankruptcy court decision and ordered the case back for a new hearing. That rehearing is now set to begin July 11.
The new amendment has been pushed by Nevada U.S. Sens. John Ensign and Harry Reid. It waswritted by Sen. Maria Cantwell, D-Wash., who has taken up the battle on the part of that state's Snohomish County Public Utility District. That utility, based in Everett, Wash., faces $122 million in claims from Enron.
The amendment reasserts the authority of FERC for determining the validity of the Enron contracts, removing the bankruptcy court's jurisdiction on the matter. The utilities would still have to seek relief from FERC.
The senators' actions drew praise on Thursday from the Nevada companies.
"We very much appreciate the bipartisan action taken by Sens. Ensign and Reid as well as Sen. Cantwell in seeing to it that the wrongful activities of Enron are both acknowledged and addressed in the energy bill," Walter Higgins, chief executive of Sierra Pacific Resources, parent company of the Nevada utilities, said in a statement. "Enron certainly should not be immune from the damages it did in Nevada and throughout the West by manipulating prices during the 2000-01 energy crisis."
The amendment was approved by the Senate Energy Committee on Thursday and will be part of the energy bill that will be voted on by the full Senate.
"Nevada ratepayers should not be held liable for millions of dollars' worth of electricity that they never received," Ensign said in a statement. "I will do whatever I can to make sure Nevada is not stuck with a $330 million bill for acts of fraud committed by Enron. The approval of this amendment is a major step in that direction."
Despite its 2003 decision to uphold the Nevada contracts, FERC issued a ruling earlier this year that said Enron was violating market rules while it entered into contracts signed during the 2000-01 Western energy crisis.
"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 Nevada companies will participate 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.
"Enron is one of the worst corporate swindlers in modern history," Reid said in a statement. "And the company is trying to force Nevadans to pay for its illegal and fraudulent activities and for electricity it never delivered. The committee's vote today reinforces what we in the Congressional delegation have been saying all along, that FERC should step in and protect Nevada ratepayers by voiding these contracts. It is FERC's main responsibility to protect ratepayers from just this type of abuse. It's time the agency stepped up to the plate."
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