Utilities Ask to be Relieved From Enron Debt

By: Associated Press
By: Associated Press

Nevada's largest electric utility is again asking federal regulators to let it off the hook for $336 million it has been ordered to pay bankrupt Enron Corp.

The request filed Monday in Washington, D.C., asks the Federal Energy Regulatory Commission to nullify power contracts that Nevada Power Co. of Las Vegas and Sierra Pacific Power Co. of Reno had in 2000 and 2001 with Houston-based Enron.

Sierra Pacific Resources Corp. parent company of the Nevada utilities, claims the Western energy crisis created a dysfunctional market and that the contracts with Enron and other power wholesalers should be void.

FERC rejected a similar argument in June.

"A company like Enron that engaged in pervasive wrongdoing should not be permitted to adroitly 'game' the legal system so it can benefit from its criminal and regulatory misconduct," said Walt Higgins, Sierra Pacific chairman and chief executive.

Enron spokesman Mark Palmer said the Nevada utilities should pay for power they bought from Enron at what thought was the best available price.

"The facts of this are squarely on Enron's side," Palmer said.

In the request filed Monday, lawyers for the Nevada utilities ask the commission to focus narrowly on $336 million they didn't pay Enron after the bankrupt energy company terminated contracts with the utilities.

The Nevada utilities have been seeking a way around an August ruling by New York bankruptcy Judge Arthur Gonzalez, who said he lacked authority to challenge the contracts. The judge said FERC does have authority.

The Nevada state attorney general's bureau of consumer protection is preparing to file papers with FERC in support of the Nevada utilities, which have been struggling financially since the energy crisis.

The Nevada Public Utilities Commission ruled in March 2002 that Nevada Power made "imprudent" purchases, and denied about half of a $922 million rate increase the company sought to pass to customers. Nevada Power said it spent that money buying high-priced power and fuel during the Western energy crisis.

The ruling led to a drop in Nevada Power and Sierra Pacific Resources credit ratings to "junk bond" status.

Enron cited the credit rating drop and invoked a contract provision letting it quit delivering agreed-upon power unless the utilities paid in advance.

The utilities failed to do so, and Enron stopped delivering power. It also filed a lawsuit in bankruptcy court, seeking more than $300 million in damages.

Gonzalez found that Enron was entitled to the payment.

Sierra Pacific Resources shares were trading up 6 cents on Tuesday, at $5.36.


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