Triumph Over Enron

After years of litigation, the Federal Energy Regulatory Commission (FERC), widely criticized for failing to intervene in a 2000-01 West Coast energy crisis triggered by Enron's manipulations of the energy market, ruled yesterday against Enron's attempts to collect more than $140 million (including interest) from the Snohomish County Public Utility District (PUD). The amount, totaling about $500 for every household in Snohomish County, represented what Enron claimed was due from an exorbitantly priced contract that Snohomish PUD signed at the height of the crisis, and then abrogated months later. The PUD claimed they owed nothing because Enron based the contract on fraudulent claims. FERC agreed.

The ruling represents a major triumph for U.S. Rep. Jay Inslee, D-Bainbridge Island, and especially U.S. Sen. Maria Cantwell, D-Wash., both of whom worked tirelessly to defend Snohomish ratepayers from the Enron claims. But local utilities are not done battling with Enron. This week, Enron agreed to pay $3.3 million to settle a claim by Tacoma Power for money Enron ripped off from the utility during 2000-01. Similar claims have been filed by Snohomish County PUD, Seattle City Light, and the Port of Seattle.

The problem is that actual money recovered in the Tacoma settlement, and the money likely to be recovered by the other victimized local utilities, will be far less than the stated totals. In total, it's estimated that Enron defrauded Western utility customers of up to $1.8 billion. But a proposed agreement between FERC and Enron lawyers in April would pay out only $10 million in awards, combined, to the utilities Enron stole from. Even worse, the Houston bankruptcy court overseeing payouts to Enron creditors is now paying only about 22.9 cents on the dollar for claims, meaning that in the end, all utilities, combined, will get less than $3 million. Probably less than the lawyer fees.

Tacoma Power, in other words, is likely to only get back about $800,000 of the $10 million it lost to Enron; the Pierce County utility also has a $175 million antitrust lawsuit pending against Enron. Similarly small recoveries likely await the Port of Seattle, which estimates that Enron's market manipulations cost King County taxpayers about $27 million; Snohomish County PUD, which puts its figure at $40 million; and Seattle City Light, stripped of $80 million.

But at least in Snohomish County, ratepayers aren't being forced to pay Enron. Good work, Maria.