State utilities could shed Enron bill
October 11, 2004
LAS VEGAS – The parent company of Nevada’s two major electric utilities has won a rehearing of a federal bankruptcy court ruling that said it owed more than $300 million to energy trader Enron Power Marketing.
Sierra Pacific Resources welcomed the Sunday court order throwing out a judgment that company officials had warned could bankrupt Las Vegas-based Nevada Power Co. and Reno-based Sierra Pacific Power Co., company chief Walter Higgins said Monday in a statement.
Sierra Pacific Resources declined further comment about the order by U.S. District Judge Barbara Jones in New York.
A spokeswoman for Houston-based Enron did not immediately respond to requests for comment.
Jones’ order sent the case back for rehearing in federal bankruptcy court in New York, where a judge had ruled he lacked authority to challenge contracts Enron and the two Nevada utilities entered during the Western energy crisis of 2001.
That ruling left Nevada Power and Sierra Pacific Power on the hook for about $336 million in contract termination payments.
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Nevada Power and Sierra Pacific Power, serving almost one million customers, signed deals for energy deliveries with Enron in late 2000 and early 2001, when prices for wholesale power were high.
Houston-based Enron quit delivering power when prices plummeted and the Nevada utilities’ credit ratings fell in spring 2002. But Enron argued in bankruptcy court that it was owed the money it would have made had the contract been fulfilled
The utilities argue that the contracts were entered into under market conditions that had been grossly manipulated, and that Enron had no intention of making good on them anyway.
The Nevada utilities also are asking federal regulators to void their Enron contracts. The Federal Energy Regulatory Commission plans hearings beginning Oct. 25.
Sierra Pacific shares were up about 2 percent, or 20 cents, at $9.49 in trading on the New York Stock Exchange.