Silicon Valley Power is considering settling its dispute with Enron. The former energy trader canceled power contracts the two signed during the energy crisis and before Enron declared bankruptcy. SVP is weighing the costs of continued litigation. ?It is likely we?ll settle,? said Larry Owens, Silicon Valley Power spokesperson. In early May, the neighboring city of Palo Alto?s power agency announced it had reached a $21 million settlement with Enron because it feared incurring higher costs from ongoing litigation (<i>Circuit<\/i>, May 6, 2005). The two cities? disputes differ in that Palo Alto ended the power agreements it signed with Enron and wasn?t quite so sure it would win the legal battle. Owens said Silicon Valley is confident it would prevail if it continued to pursue the matter in court. If an agreement were reached, a rate increase would not be needed because ?reserves are sufficient to cover a potential settlement,? Owens added. In mid-2001, Enron ended two electricity deals with SVP, claiming that termination clauses were in effect. Thus, Silicon Valley owed it $145 million, according to Enron, which was payment for the remainder of the deals not executed. SVP signed two agreements, one for 75 MW of power from April 2001 to 2009, valued at $275 million, and the other for 50 MW of electricity to be delivered from April 2001 through 2006, which was to cost $145 million. SVP stated that as Enron?s financial situation became more precarious in late 2001, it tried to extract cash from it, which included an attempt ?to manufacturer a contract termination in order to make a claim for a windfall.? In July 2004, SVP filed a complaint with the Federal Energy Regulatory Commission, objecting to Enron?s attempt to terminate the deals and trigger the termination clause. FERC is also involved because it will assess whether the company?s contracts were just and reasonable. However, the date for the hearing on that issue was postponed, so the matter could drag on.