The Snohomish County PUD’s decision to settle a long-standing contract dispute with Enron Corp. was the right one, but that doesn’t take the bitter taste out of it.

Enron, whose ethical bankruptcy long preceded its financial one, will collect $18 million from the PUD, money that will go to creditors. With an arbitration panel set to decide on Enron’s $180 million claim against the PUD, the utility’s commissioners opted wisely not to gamble. Still, settling even for 10 cents on the dollar – far better than other parties are doing with Enron – is maddening.

Enron was the villain and PUD customers the victims in this case, one that will stand as a case study in what happens when corporate depravity meets regulatory indifference.

The PUD was courageous enough to call baloney on an expensive power contract it signed with Enron after it learned that the energy giant had criminally manipulated markets, sending electricity prices soaring. After the deal was canceled, Enron tried to assess a huge termination fee. Indignant and tenacious PUD officials fought back, uncovering taped conversations that caught Enron traders laughing as they worked to fleece ratepayers – work the Federal Energy Regulatory Commission should have been doing. The PUD became a national hero for making that evidence public.

The $18 million settlement won’t force a rate increase for customers, PUD General Manager Steve Klein assures. The money will come out of a legal contingency fund set up for just such an outcome. An expensive arbitration judgment against the utility – a possibility that would have been irresponsible for PUD commissioners to dismiss – could have forced rates higher. The PUD will continue to seek damages from financial institutions that helped Enron, with the hope of defraying costs of the settlement and overall legal fight.

The settlement also eliminates a big distraction for the PUD, which needs to devote as much attention as possible to supplying our growing county with the electricity it will need in the decades to come.

Among the lessons learned in this ugly case, the most important is that when federal energy regulators become complacent, or intentionally look the other way, the potential for mischief is enormous. Few markets are as complex as energy markets, and now we know how vulnerable they can be to criminal exploitation. Those responsible for policing them must be vigilant, their enforcement methods proactive.

It should never again fall on a small, local utility like the Snohomish County PUD to do the federal government’s work.