Silicon Valley Asks FERC to Reject Enron Claim

The city of Santa Clara filed a complaint at the Federal Energy Regulatory Commission last week objecting to Enron's "unjust and unreasonable" attempt to collect a $147 million "windfall" for early termination of a long-term energy contract. Enron and the city's power arm, Silicon Valley Power, have been feuding over who owes what to whom since Enron's demise. "We thought we'd be able to work it out by now," said Silicon Valley assistant director John Roukema. Enron made a complaint in bankruptcy court, and the dispute has been tangled up there since May 2002. The bankruptcy battle is convoluted, and at times ?we don?t know who we should be talking to,? Roukema said. The city claims that Enron Power Marketing Inc. attempted to use the disruption caused by its financial collapse "to fabricate a termination claim to 'drag money in' from the City." The city also seeks to untangle the matter from the bankruptcy court and have FERC decide it?specifically the reasonableness of rates, charges, and terms and conditions of electricity sales contracts. Enron did not return a request for comment. Silicon Valley and Enron's power-marketing arm signed a series of short- and long-term deals, with the latter totaling about $420 million. Under the former, Enron Power Marketing would buy power from the agency. Silicon Power also agreed to pay $275 million for delivery of 75 MW around the clock from 2001 to 2009. The price of power was between $44.00/MWh and $47.00/MWh. It also signed a deal for another 50 MW at a price of $64.00/MWh from 2002 to 2006 for $145 million. After Enron collapsed, Silicon Valley demanded assurance that the marketing arm would deliver the power. It withheld payment for a November 2001 invoice. Enron claimed the city defaulted on payment. The latter disagreed, adding that Enron owed it $1 million. FERC issued notice July 6 that interested parties would have until July 22 to comment on the matter ( EL04-114 ).

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Silicon Valley Asks FERC to Reject Enron Claim

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