California Settles With Enron

The pact, valued at $1.52 billion, includes the Washington and Oregon attorneys general.
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California Attorney General Bill Lockyer said a $1.52 billion settlement has been reached with

Enron

that will resolve market-manipulation and price-gouging claims related to the state's power crisis more than four years ago.

"After masterminding one of the largest ripoffs in history, Enron collapsed under the weight of its own greed and corruption," Lockyer said in a statement on the attorney general's Web site. "Still, with this settlement, Grandma Millie and the rest of California will squeeze justice from this corporate turnip."

Besides Lockyer, other California parties to the proposed settlement include the California Department of Water Resources, the California Public Utilities Commission, the Electricity Oversight Board,

PG&E's

(PCG) - Get Report

Pacific Gas & Electric,

Edison International's

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Southern California Edison and

Sempra Energy's

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San Diego Gas & Electric.

Washington Attorney General Rob McKenna and Oregon Attorney General Hardy Myers also are involved in the settlement. Before it becomes final, the settlement must be approved by the Federal Energy Regulatory Commission and the Enron bankruptcy court.

The proposed settlement calls for the California participants to receive an $875 million unsecured claim in the Enron bankruptcy proceeding, plus $47.5 million in cash. The California parties would provide the Washington and Oregon attorneys general $22.5 million each from the unsecured bankruptcy claim.

Additionally, Lockyer and the other attorneys general would receive a combined $600 million penalty, which would be a subordinated claim in the bankruptcy proceeding.

The amount ultimately paid by Enron under the settlement won't be known until its Chapter 11 bankruptcy process is completed.

Funds paid to the California group would resolve the state's and utilities' claims for refunds now pending before FERC. The money would compensate businesses and individuals for overcharges, lower the financial burden of PG&E rate-payers and reduce all utility rate-payers' obligation to retire bonds sold by the state to finance power purchases at the height of the 2000-01 energy crisis.

Aside from resolving the refund claims, the proposed settlement would end a lawsuit filed by Lockyer against Enron.