Enron Sues California Power Exchange
Enron Corp., which owes creditors more than $67 billion, has sued a defunct California power agency, seeking the return of a $136-million deposit the Houston-based energy giant had made in order to trade energy in the state.
Enron, which filed for bankruptcy protection in December 2001, had pledged the money as collateral in order to trade energy on the California Power Exchange. The exchange ran the primary marketplace for California’s three utilities before closing during the state’s energy crisis in 2001. The exchange now says the $136 million should be used for refunds for utilities that claim they were overcharged during the crisis.
“I don’t know how things work down there in Enron country, but in California thieves don’t have any right to the money they stole,” Tom Dresslar, a spokesman for California Atty. Gen. Bill Lockyer, said, responding to the suit, which was filed Wednesday in New York. “It’s ludicrous.”
The state, which has a $15-billion budget deficit, is seeking $9 billion in refunds for what it claims were inflated power prices during the energy crisis, which left its two largest utilities insolvent.
Former Enron energy traders Timothy N. Belden and Jeffrey S. Richter have pleaded guilty to charges of manipulating the California energy market. Former trading manager John M. Forney was charged with 11 counts of fraud related to the manipulation of power prices during the crisis in December.
The exchange was liquidated after it filed for bankruptcy protection in March 2001.
Enron, whose own bankruptcy filing is the second-largest in U.S. history, had several banks issue $136 million in letters of credit in 1999 to be used as collateral required for it to trade on the exchange.
The exchange improperly drew the letters of credit in 2001, Enron said in court papers, and the money is now in an account at the Bank of New York.
“The funds do not secure the contingent refund claims, or anything else,” Enron said in the papers.
Paul Klein, a spokesman for Southern California Edison Co., declined to comment. Ronald Low, a Pacific Gas & Electric Co. spokesman, said he had not seen the lawsuit and wanted to review it before commenting.
