Power Exchange to Live On in Lawsuits

The California Power Exchange may be passing from existence, but it’s still a live target for litigation.

Enron Corp. sued the market Wednesday to prevent it from using letters of credit that the company was required to file to trade on the exchange.

Though Enron’s collateral exceeds its liabilities to the exchange, the company moved preemptively to make sure the market could not tap its assets to pay off other debts, an exchange spokesman said.

The Power Exchange has also sued Southern California Edison for failing to pay for $215 million of power it bought in December, asking to recoup the money by liquidating the utility’s long-term power contracts. A Superior Court judge is scheduled to rule on the matter Friday. Pacific Gas & Electric, fearing that the exchange would file a similar action if it defaults on its January purchases, has sued to prevent the market from doing so.

In all three cases, lawyers may still be arguing after the Power Exchange turns off its own lights. On Tuesday, the Power Exchange board voted to shut down its spot market, saying decisions by federal regulators had diminished trading activity to the point of futility.

The exchange closed its “day ahead” market Tuesday and ended trading on its “day of” market at noon Wednesday. It will stay open indefinitely with a skeleton staff to handle long-term contracts.

The Pasadena-based nonprofit was once a cornerstone of the state’s deregulation plan, the principal market in which electricity was auctioned for delivery to Californians.

But the exchange’s demise was sealed by continuing credit problems at Southern California Edison and Pacific Gas & Electric, a federal ruling that the utilities could buy power elsewhere and changes in pricing policies that sent sellers to markets outside California.

Trading volume on Tuesday, its last full day, was 24,176 megawatt-hours, compared with a daily average of 530,000 megawatt-hours last summer. One megawatt-hour is enough electricity to supply 1,000 typical homes for an hour.

The exchange dismissed 15% of its 200 employees Jan. 19 and has fired 10 to 15 more since then as their jobs became unnecessary, spokeswoman Beth Pendexter said. “People are kind of down,” Pendexter said. “We know the end is inevitable, but that doesn’t make it any easier.”