SACRAMENTO, Calif. (AP) — Bankrupt energy company Enron Corp. has agreed to settle claims that it gouged California and other Western states during the energy crisis of 2000-01, when the region was hit with blackouts and soaring electricity bills.
The once high-flying company said it would pay up to $1.5 billion, but the exact amount could be far less because of Enron’s bankruptcy proceedings.
“We’ll get some of it; we just don’t know yet how far the assets of Enron will stretch to these multiple claims,” California Attorney General Bill Lockyer said. “We hope to recover as much as possible.”
The agreement requires approval by the bankruptcy court and the Federal Energy Regulatory Commission.
California has sought nearly $9 billion in refunds for overcharges by dozens of companies stemming from the energy crisis, when wholesale energy prices hit record highs. The Enron deal is the second-largest of the state’s energy settlements, behind a deal valued at more than $1.6 billion with Houston-based El Paso Corp.
Besides a $47.5 million cash payment, Enron will provide California with an unsecured claim for $875 million. Oregon and Washington would be entitled to $22.5 million each from that unsecured settlement.
Unsecured claims are currently valued between 22 cents and 25 cents on the dollar, Mr. Lockyer said.
The settlement also calls for Houston-based Enron to pay a $600 million penalty to the three states. A penalty claim is one of the last to be paid under bankruptcy law, said Enron spokeswoman Jennifer Lowney, and may not be paid.
Still, Mr. Lockyer said the settlement “represents economic justice for Californians.”
Enron’s interim CEO, Stephen Cooper, said the settlement helps Enron resolve its bankruptcy “so that we can accelerate distributions to all other creditors.”
About $65 billion in claims are awaiting settlement in Enron’s bankruptcy case, company officials said. California’s claims will be joining that long line.
Once the settlement amount is set, California’s three investor-owned utilities — Pacific Gas and Electric Co., Southern California Edison and San Diego Gas and Electric — will calculate how much each will receive in refunds.
How the utilities will use the refund is up to the California Public Utilities Commission, Edison spokesman Gil Alexander said. The PUC has directed utilities to use previous refunds to offset future rate increases, he said.
Thousands of Enron workers lost their jobs and investors lost billions when the company declared bankruptcy in 2001 amid accusations of financial irregularities and fraud.