By Scott North
Herald Writer
The Snohomish County PUD’s involvement with Enron, the beleaguered energy-trading company from Texas, appears to be something of a good-news, bad-news story.
The good news is the PUD late last year stopped buying power from the Houston-based company, which suffered the biggest bankruptcy in U.S. history and has become the focus of a congressional investigation. Dumping the eight-year power purchase contract with Enron saved the PUD an estimated $24 million a year and figured into the district’s recent decision to roll back residential rates by 5.1 percent.
But the PUD’s board of commissioners today is scheduled to deal with the downside of its Enron dalliance. The board is considering a measure acknowledging that the PUD now faces up to $108 million in financial liability from its now-defunct Enron contracts.
While Enron hasn’t tried to collect the money, and the PUD steadfastly maintains it owes nothing for terminating the agreements, PUD commissioners are considering a measure that would require the district to maintain power rates "in an amount sufficient" to pay off the $108 million should it ever come due.
The language may sound ominous, but "this really is an accounting move," PUD spokesman Neil Neroutsos said.
The resolution makes clear that the utility views its action solely as a bookkeeping formality and "that nothing in this resolution is intended or should be construed as an acknowledgement or admission that any amount whatsoever is due" or payable to Enron by the PUD.
The PUD doesn’t anticipate having to pay the money, but it needs to acknowledge the liability is there to conform with accepted accounting practices, said Glenn McPherson, the PUD’s treasurer and assistant general manager.
The PUD entered its power-purchase contract with Enron in April 2001, spending about $2 million a month for electricity that met about 3 percent of the utility’s energy needs. It backed out of the agreement after the company’s legal and financial problems put Enron in violation of terms of the deal, which required the company to remain on sound financial footing, Neroutsos said.
Records show the PUD did about $35.2 million in business with Enron before terminating the relationship. In addition to the contract, the utility also made spot power purchases from the energy-trading firm.
The commission meeting is scheduled to start at 8:30 a.m. at the district’s headquarters, 2320 California St. in Everett. It will start with a closed-door session, during which board members reportedly will discuss litigation and review the performance of an unnamed employee. A presentation on the PUD’s options for obtaining new sources of power also is planned.
The board is not scheduled to discuss the Enron issue until the afternoon session that starts at 1:30.
You can call Herald Writer Scott North at 425-339-3431
or send e-mail to north@heraldnet.com.
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