Enron Seeks Millions for Power

NEW YORK, NY-- The Enron Corporation collapsed into bankruptcy proceedings after revealing that it had reported earnings that never really existed. Now, a major Nevada utility stands on the brink of a bankruptcy filing because Enron is demanding hundreds of millions of dollars of payments for electricity that it never really delivered, The New York Times reported.

The dispute between two electric utility units of Sierra Pacific Resources has been bubbling along for several months, as Sierra and Enron battled in bankruptcy court about whether the amount of money owed by Sierra was nothing — or what is now more than $330 million. After having lost there, Sierra is expected today to file an emergency request with the Federal Energy Regulatory Commission, asking it to take charge of the controversy and invalidate the payment requirement.

At issue are a series of long-term energy contracts entered into in 2000 and 2001 by the Sierra units, through a broker, with Enron Power Marketing. Under the contracts, Enron committed to delivering power to the Sierra utilities, known as the Nevada Power Company and the Sierra Pacific Power Company, in future months and years.

By the time Enron collapsed into bankruptcy proceedings in December 2001, Sierra was struggling with its own financial problems. The contracts were entered into during the electricity crisis in the West that led to blackouts in California and huge increases in the price of power. Under the rules governing western utilities, Sierra was restricted from passing on the costs of energy to ratepayers, and its financial position was weakened. Soon, credit agencies, concerned about the situation, downgraded Sierra's debt.

-- NYSSCPA.org News Staff

Posted on 10/6/03