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Earlier CalEnergy cash flow problems tied to Enron

May 15, 2002|By MATT YOUNG

Special to this newspaper

WASHINGTON (MNS) — The Federal Energy Regulatory Commission is investigating allegations that California's electricity crisis was manipulated by Enron, but the possible hardship Enron caused Imperial County was more subtle.

Early last year, geothermal energy producer CalEnergy Co. Inc., one of the top private employers in the Imperial Valley, had ‘‘very serious cash flow problems,'' said spokesman Vince Signorotti.

While the company had a contract with Southern California Edison Co. to provide energy, Signorotti said Edison didn't pay for five months, beginning in November 2000.


‘‘At its peak Edison owed us $140 million'' he said. ‘‘It was very serious'' and ‘‘threatened (CalEnergy) project here in Imperial.''

In March 2001 an Imperial County Superior Court gave CalEnergy the right to break its contract with Edison and sell in the general market, Signorotti said. Wholesale energy prices that Edison paid to get its power were more expensive than the prices it could charge consumers, which caused its financial problems, said Edison spokesman Gil Alexander.

But Alexander said Enron's possible manipulation of energy prices, outlined in a December 2000 Enron memo, may have exacerbated Edison's financial situation.

‘‘We have believed since 2000 that the wholesale prices in California were being manipulated to the detriment of customers and utilities,'' Alexander said.

Since the crisis, Edison has repaid its debt to CalEnergy and the two companies are doing business again.

Rep. Bob Filner, D-Chula Vista, argued that many California congressmen believe ‘‘the electricity crisis was not one of supply and demand. … We need to have a real investigation."

Enron has ‘‘criminally stolen between $40 million to $50 million from California in the last two years,'' Filner asserted.

While criminality has not been established, the December Enron memo detailed one California market strategy that ‘‘has produced profits of approximately $30 million for FY 2000.'' The tactics involved charging the California Independent System Operator for relieving energy congestion that the company fabricated.

Still, CISO spokesman Gregg Fishman said he didn't think Enron contributed to California's spiked wholesale energy prices. Enron ‘‘just used the chaotic system to their benefit rather than precipitate much of the chaos.''

Imperial County's electricity rates remained stable during the statewide energy crisis. The Imperial Irrigation District, which provides most of the county's energy, had energy contracts that shielded residents from higher costs being charged by other utilities. Although the utility had to lock in higher prices for natural gas for summer 2001 to meet the season's high energy consumption, the Enron memo did not mention strategies to manipulate natural gas prices.

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