PUC Launches Probe of Enron Bankruptcy’s Effect on State

California utility regulators launched an investigation Tuesday into the potential impact of Enron’s bankruptcy on the state’s energy marketplace and on the company’s large institutional customers, which range from the state’s university system to commercial chains.

The state Public Utilities Commission voted 5 to 0 to probe whether Enron’s recent Chapter 11 filing would affect electricity and natural gas supplies and prices in a state that already has endured a yearlong energy crisis.

“The question is: Will they stop serving their customers and dump them onto utilities, and at what price?” said commission President Loretta M. Lynch.

Enron officials said they will continue to serve their customers as they review the company’s strategy for emerging intact from federal bankruptcy reorganization.

The Houston-based energy titan and its affiliated companies are important energy service providers in California under the recently suspended direct-access program, which allowed customers to bypass their local utility and contract directly with an energy marketer like Enron.

Enron refused to describe its market share and activities here, saying that information is proprietary. But PUC Commissioner Carl Wood, who is heading the inquiry, said, “They seem to be the largest direct-access providers, representing almost half of the load.”

The PUC reports that 81,960 customers were using direct access as of October, amounting to 12% to 15% of the state’s total power load.

The commission ordered Enron and the state’s major utilities to supply information by next Tuesday on Enron’s services and customer base, as well as its present and expected future impacts on California’s energy markets. For example, the PUC asked whether Enron and its affiliates increased their reliance on the state’s power grid operator to provide electric power for retail customers.

Enron spokeswoman Peggy Mahoney said the company would cooperate fully. Evidentiary hearings are scheduled for the week of Jan. 7.

On Dec. 2, Enron and affiliates with more than $50 billion in assets and $31.6 billion in debts became the largest company to file for Chapter 11 protection from creditors. The company listed a debt of about $49 million to the California Power Exchange, $2.4 million to the California Independent System Operator and $1.4 million to the electric and gas utilities operated by San Diego-based Sempra Energy.

The company Web site assures customers that their service will not be interrupted. “If you have previously been served by a utility and for some reason Enron does not provide gas or power, the utility will automatically serve these customers,” the site says.

Many companies don’t look forward to such a prospect. Officials said the energy bill of CKE Restaurants Inc., the parent of Carl’s Jr. and Hardee’s, would rise by about $3 million annually if Enron cancels its contracts to supply power directly to the chain’s California facilities.

Enron has a contract through March 2004 to supply power to the University of California and the California State University systems. UC spokesman Charles McFadden said the contract provides for another energy provider to assume the contract if Enron can’t continue. “The lights are not going to go off,” he said.

Will the price go up? “I hope not,” he said, adding that the university has saved tens of millions of dollars buying power from Enron since 1998.

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Times staff writer Marc Ballon contributed to this report.