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PUD Gets Boost In Fight Against Enron

Snohomish PUDEnron Corp. has been trying to get $122 million from the Snohomish County PUD, the utility that made Enron energy traders' recordings public. A provision that would make it harder to do that, survived in a U.S. Senate energy bill adopted Tuesday.

If Sen. Maria Cantwell's provision survives when the Senate bill is reconciled with a similar bill in the House of Representatives, the PUD will be in better shape in its long-standing battle with what's left of Enron.

Cantwell's measure would disallow Enron's bankruptcy lawyers to pursue the PUD for $122 million for canceling a 2001 electricity contract. The PUD first must win in a Federal Energy Regulatory Commission court before it can get out of paying Enron, however. That legal fight is slated for September.

Enron claims the PUD owes it $117 million -- now more than $122 million with interest -- because it cancelled a contract to buy electricity at inflated prices during the 2000-01 West Coast energy crisis.

The PUD claims that Enron illegally contributed to the record electricity price run-ups during the crisis, and canceled its contract right before Enron filed for bankruptcy in 2002. If a bankruptcy loophole isn't closed, there's a chance the PUD could be forced to pay even if federal regulators rule in the PUD's favor.

"There is no way under the sun that my constituents owe Enron another penny," Cantwell said. "Not one single penny more."

Still, Cantwell said the battle is not won. The House has "the exact opposite" provision in its bill, she said, and even if that is snuffed out, the PUD is still relying on federal energy regulators to rule in its favor.

The House provision would make it more difficult for the PUD to avoid paying Enron because the provision raises the standard for a utility to prove that an energy trader offered a contract fraudulently, said Al Aldrich, the PUD's government affairs director.

When the FERC proceeding starts in September, the PUD and other utilities in Nevada and California will argue that they shouldn't have to pay Enron for canceling their contracts early.

"We're pretty comfortable that we have enough evidence to determine (that the Enron contract) is fraudulent," Aldrich said. That evidence includes hundreds of hours of taped conversations in which Enron traders admitted they were intentionally manipulating electricity prices during the energy crisis - tapes that the PUD gained national fame for publicizing last year.

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