After a costly four-year legal battle, Silicon Valley Power agreed to pay $36.5 million to settle its dispute with Enron over a $147 million claim for two canceled energy deals with the defunct power trader. The tentative settlement was announced March 10 by the Federal Energy Regulatory Commission trial staff, which heavily pressured the parties to end their fight. "We felt-and still feel-we had a really strong case, but there was no end in sight," said Junona Jonas, Silicon Valley Power director. "It was a long and expensive proceeding," she said, noting that discovery in the case had not even begun. Even so, the city of Santa Clara's municipal utility spent $5 million on attorneys' fees for legal work at FERC and in the bankruptcy court. "The settlement agreement provides regulatory certainty for Enron and Santa Clara, and promotes efficiency for the Commission," states the FERC trial staff's joint settlement offer. It puts to rest the largest contract-termination dispute between Enron and contracting parties, it adds. The $36.5 million settlement will not cause rates to rise but will be covered by reserves, according to Jones. The muni has $240 million in reserves. I am hoping some of the money goes to creditors really hurt by the Enron debacle and not the crooks," Jonas added. In May 2005, Silicon Valley's neighbor, the city of Palo Alto, settled its fight over the cessation of its Enron contracts because of the high cost of continued litigation. Soon afterward, Silicon Valley said it too expected to reach a deal with Enron. Silicon Valley's deals were terminated by the former giant trader after it filed for bankruptcy in 2002 (Circuit, May 13, 2005). However, reaching agreement took many months because of the wide gulf between what Silicon Valley was willing to pay and what Enron insisted it was owed under the termination clauses. "It took a significant amount of effort to get within shouting distance of a possible settlement," said Roland Pfeifer, assistant attorney for the city of Santa Clara. FERC staff pushed hard for Silicon Valley and four other parties involved in suits with Enron to resolve their disputes. The turning point came with a portion of the 2005 Energy Policy Act, which held that FERC, and not the bankruptcy court, had jurisdiction over the matter, according to Pfeifer. Under the settlement agreement, the federal commissioners must finalize the deal by June 30. "The commission is not bound by the terms of the agreement but will take it into account as it reviews the settlement," said Bryan Lee, FERC spokesperson. Silicon Valley Power raised its rates recently, but that was in response to higher gas costs and the need to fill the void left by the expired Western Area Power Administration contracts, Jonas said. Rates rose 5 percent in January and will rise another 5 percent this June. There are two remaining Enron cases to settle, FERC staff said on March 16. Those are the Metropolitan Water District of Southern California and the Snohomish Public Utilities District in Washington.