Score one for Snohomish County PUD in its David-vs.-Goliath battle with Enron Corp.
Federal energy regulators announced Thursday that the Houston energy trader must refund all profits it gained selling electricity to the PUD and similar utilities from 1997 to 2003. Most of the profits came during the 2000-2001 West Coast energy crisis.
According to estimates from California officials, that means Enron owes West Coast utilities more than $3 billion. Locally, estimates are that Enron owes the PUD’s 290,000 customers as much as a $30 million refund.
Because Enron is in bankruptcy court, PUD officials don’t know how much cash – if any – will ever make its way back to Snohomish County.
Getting refunds could be especially problematic because the federal government missed a deadline to give West Coast utility customers a seat at the table when Enron’s assets are divvied up among its long list of creditors, said Eric Christensen, a PUD attorney.
Perhaps the bigger victory for the PUD is that Thursday’s Federal Energy Regulatory Commission ruling will make it much easier for the utility to fight Enron’s claim that the PUD owes it $122 million, Christensen said.
“It’s not the death knell for Enron’s claims, but it certainly makes the mountain they have to climb a lot steeper to get money from us,” he said.
Enron says the $122 million is a penalty for the PUD’s early cancellation of a 2001 energy contract.
The PUD has gained national attention in recent weeks for digging out phone transcripts that show Enron intentionally manipulated the electricity market during the energy crisis. The price gouging led to unprecedented spikes in electricity prices, contributing the PUD’s 50 percent rate hike in 2001.
The state’s congressional delegation has been leaning on FERC to invalidate Enron’s $122 million claim against the PUD, something that FERC has so far declined to do.
Although FERC didn’t toss out Enron’s case against the PUD, it did rule that Enron violated its permit to sell electricity when it signed a contract with the PUD in 2001.
If need be, the utility will take Thursday’s ruling to bankruptcy court to prevent Enron from collecting any more PUD money. If the PUD is forced to pay Enron, the cost to each customer would be $420.
But the PUD shouldn’t have to do that, said U.S. Sen. Maria Cantwell, D-Wash. The $122 million payment should be considered part of the profits that FERC ordered refunded, she said.
However, FERC left that decision up to an administrative law judge.
“We’re cautiously optimistic,” Cantwell said. “We’ve been disappointed so many times, it’s hard to tell if this is another curveball.”
Cantwell said it could take another year before Judge Isaac Benkin assesses Enron’s PUD-related profits, and whether the $122 million payment can be tossed out.
“We’re going to keep the heat on,” she said.
U.S. Rep. Jay Inslee, D-Wash., also intends to maintain the pressure on Enron.
“The burglar alarm has now been going off for two years, so it’s nice to see some signs of life” at FERC, Inslee said. “There’s more work to do. We’re going to keep blowing the whistle.”
Enron spokeswoman Karen Denne said the energy broker is reviewing FERC’s ruling. She offered no further comments.
FERC did rule that Enron must refund $32.5 million in profits from an illegal relationship it had with El Paso Electric Co. during the energy crisis. Cantwell’s office said there’s a chance the PUD could get a tiny fraction of that money.
Reporter Lukas Velush: 425-339-3449 or lvelush@heraldnet.com.
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