Judge orders Enron to deliver electricity to universities

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Judge orders Enron to deliver electricity to universities

Updated: April 11, 2001 - 2:06 p.m.

SAN FRANCISCO -- Saying that Enron Energy Systems Inc. may be in breach of contract, a federal judge Wednesday ordered the Houston company to abide by its agreement to sell cheap power to the state's public universities.

Enron was attempting to get out of delivering power for the final year of a four-year deal with the California State University and University of California systems.

Enron, which buys power from producers and sells it on the market, said the contract would cost the energy concern $12 million a month because of skyrocketing wholesale power prices. Enron said the state should free Enron from its obligation and taxpayers should pick up the tab.

"It's our economic interest to provide a service with the least amount of dollars we can provide it for," Enron attorney A. William Urquhart said. He later described the case as being "all about money. It's all about money." Enron said it would file an emergency appeal to the 9th U.S. Circuit Court of Appeals in San Francisco to overturn U.S. District Judge Phyllis Hamilton's ruling in the suit brought by the state's two university systems.

Appearing in federal court, state Attorney General Bill Lockyer argued that Enron wants out of the contract so it can engage in a "marketing game" with the universities' promised power and sell it on the open market for 10 times more than what the electricity cost Enron.

He said lawmakers may have "left the keys in the car" when they approved California's failed energy deregulation scheme that has prompted the energy crisis, "But it is still theft to steal the car." The judge issued a temporary injunction against Enron, forcing it to continue providing service as the suit brought by the universities proceeds. When the judge issued the order, she also said there is a likelihood Enron will lose the suit.

"I am persuaded, in the end, there is a very strong likelihood of success on the breach of contract claim," the judge said. UC's annual electric bill is about $87 million and its natural gas bill is about $26 million. CSU annually pays about $40 million for electricity and $20 million for natural gas.

The case is UC Regents vs. Enron Energy Systems Inc., 01-1006.

-- Associated Press

-- Swissrose (cellier3@mindspring.com), April 11, 2001

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