UC, Cal State Systems Settle Enron Lawsuit

From a Times Staff Writer

The University of California and California State University systems have settled a lawsuit they brought against Enron Energy Services in March to keep the power company from halting their service and exposing them to higher energy costs.

The agreement announced Wednesday will extend the universities' contract with Enron for two years--through March 2004--and return them to their previous status as direct-access customers of the Houston-based energy giant.

Specifics of the contract extension have yet to be worked out. But university officials said the extension will mean considerable savings for the UC and Cal State systems because it will insulate them from fluctuating power prices.

In 1998, the public universities signed a four-year contract with Enron, locking into discounted fixed rates for electricity. But in February, Enron notified the universities and other customers in California that their power would be supplied by Pacific Gas & Electric and Southern California Edison--a shift that saved the energy company money. The universities filed suit, fearing that the change could leave them with soaring energy bills.

The settlement "means we're assured of a stable source of electricity for the remainder of the contract," UC spokesman Charles McFadden said. "And it means we're paying a non-spot-market rate for electricity. It's very good news."

Terms of the settlement call for Enron and the universities to negotiate price and other aspects of the extension by Dec. 1.

The UC and Cal State systems are among the state's biggest electricity consumers, paying more than $125 million a year for power.

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