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Utilities
Different utilities share common foe
By Kevin Rademacher / Staff Writer

It would be difficult to imagine much in common between Nevada Power Co. of Las Vegas and the Snohomish County Public Utility District.

The latter is a municipal power company with about 290,000 customers in northwestern Washington, tucked comfortably north of bustling Seattle.

Snohomish County's average July temperature is 75 degrees, and those enviable temperatures are managed with an abundance of relatively inexpensive hydroelectric power. The Clark County population, which is racing toward 2 million, sweats out 100-degree days in bone-dry conditions, gaining relief only in the cool breeze of power-guzzling air conditioners.

One of the few things the Snohomish utility and Nevada Power do share is a mutual adversary -- Enron.

The notorious energy trader has claimed that the Washington utility owes $122 million in termination payments after it canceled long-term contracts signed during the Western energy crisis. The utility maintains that the claim should be thrown out because of mounting evidence of market manipulation.

It's a strikingly similar argument to that which has swirled around Nevada in recent months. In 2002 Enron canceled long-term deals with Nevada Power and its sister utility, Sierra Pacific Power Co. of Reno. The move came after the Nevada companies had their credit cut to junk status amid fallout of the Western energy crisis.

After canceling the deals, Enron claimed the Nevada utilities owed $336 million in termination payments. Legal battles have since been mounted on several fronts. In what could be a key development the Federal Energy Regulatory Commission -- which originally upheld the Enron contracts -- has scheduled a rehearing of the Enron-Nevada case and a decision could come by the end of the year.

The rehearing was slow in coming, and it might never have happened if not for the efforts of Snohomish officials. In March Nevada Power made public its effort to obtain tapes of conversations between Enron and Colorado River Commission power traders. The tapes included embarrassing conversations between a CRC trader and an Enron official trying to inflate the market to drive up prices and possibly damage the utility. At least that's how Nevada Power sees it.

The release of the tapes grabbed local headlines but it also prompted Snohomish to review similar tapes of Enron dealings in the northwest. The results were equally volatile, sparking broad outrage among members of Congress, garnering national media coverage and ultimately putting enough pressure on FERC to act on an issue it had previously seemed content to let sit untouched.

"It's been a cooperative effort," said Russ Campbell, an attorney handling the Enron case for the Nevada utiltiies. "We are both out to protect the ratepayers of our respective states."

On the same day FERC announced it would grant the rehearing for the Nevada utilities, it also affirmed a ruling that Enron should forfeit $32.5 million in unjust profit. The announcement came less than an hour before FERC Chairman Pat Wood was scheduled to meet with infuriated U.S. Sen. Maria Cantwell, a Washington Democrat, said Neil Neroutsos, a spokesman for Snohomish PUD.

"I think (having both the Nevada companies and Snohomish involved) certainly increased the political pressure," he said. "Collectively, we were able to speak with a louder voice."

And the effort continues.

Snohomish this month took the lead in making a filing with FERC seeking clarification in the ruling that Enron should cough up unjust profit. The filing, which also was signed by the Nevada utilities, the Nevada Public Utilities Commission and the Nevada Attorney General's Office, indicated that termination payments that the Enron wants to collect fall under the category of unjust profit and should be rejected.

Kevin Rademacher covers utilities and finance for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at (702) 259-4069 or by e-mail at kevinr@lasvegassun.com.

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