Judge orders Sierra Pacific to pay $309 million to Enron
LAS VEGAS (AP) — A judge has ordered Sierra Pacific Resources to pay $309 million for contracts its subsidiaries, Nevada Power Co. and Sierra Pacific Power, made with now-bankrupt energy giant, Enron Corp.
The Federal Energy Regulatory Commission has already said those contracts were tainted by market manipulation, but has refused to set them aside.
In Thursday’s ruling from the U.S. Bankruptcy Court in New York, Judge Arthur J. Gonzalez said he would not oppose FERC’s decision regardless of Sierra Pacific’s arguments.
“This court does not have jurisdiction to consider these issues as they are within FERC’s exclusive jurisdiction,” Gonzalez wrote.
Walt Higgins, chairman and CEO of Sierra Pacific Resources, said in a statement the company will study Thursday’s decision and will consider possible courses of action.
“We do not believe those who were largely responsible for the 2000-2001 western energy crisis should benefit in any way from the dysfunctional marketplace they helped create,” Higgins said.
The Nevada-based company had previously said such a ruling could push it into bankruptcy.
“You have to imagine $300 million would be a huge blow to any company,” said Don Soderberg, chairman of the state Public Utilities Commission.
Nevada Consumer Advocate Tim Hay agreed.
“Obviously it is, if upheld, going to have substantial and dramatic economic implications for the company,” he said.
Although such a ruling would typically be paid for by customers through higher bills, Hay said the Bureau of Consumer Protection would oppose that.
“If upheld, we don’t believe these are prudently entered into contracts,” Hay said. “We don’t believe any liability should be passed on to the ratepayers.”
In March, the Federal Energy Regulatory Commission released an extensive report outlining manipulation in the Western market by Enron and other power traders between 1999 and 2001.
The report blamed manipulation for driving up the cost of the resulting contracts. But federal regulators commission upheld the contracts, saying to overturn them would undermine the willingness of sellers and buyers to make future energy supply deals.