"Enron Told to Supply UC, Cal State"

---------------------- Forwarded by Joseph Alamo/NA/Enron on 04/11/2001 05:29
PM ---------------------------

Joseph Alamo
04/11/2001 05:28 PM

To: Miyung Buster/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:

Subject: "Enron Told to Supply UC, Cal State"
Wednesday, April 11, 2001 ,2001 San Francisco Chronicle

Enron Told to Supply UC, Cal State
Wednesday, April 11, 2001 ,2001 San Francisco Chronicle
A federal judge ordered the energy giant Enron today to restore direct
electric service to the University of California and the California State
University system, under agreements that Enron wanted to abandon so it could
sell the power for more money elsewhere.
Houston-based Enron Energy Systems signed four-year contracts with the two
university systems in 1998, agreeing to supply power for 5 percent less than
the price cap set by the state's 1996 deregulation law.
The contracts were due to run through next March, but Enron dropped direct
service to the universities on Feb. 1 and left them to rely on power supplies
from Pacific Gas & Electric and Southern California Edison Co., while Enron
brokered electricity sales at much higher prices on the spot market.
Enron promised to keep its promise of low rates for the rest of the contract,
but the universities said the change to utility service would hurt their
conservation efforts and expose them to the risk of blackouts.
Joined by Attorney General Bill Lockyer, who said the public interest was at
stake, university lawyers argued successfully today for an injunction
restoring direct access.
The language of the contracts indicates that "Enron did not have the right to
return the university systems to the utilities," said U.S. District Judge
Phyllis Hamilton.
She cited the "precarious position of PG&E," which filed for bankruptcy last
Friday, and said the universities had bought some protection from the risks
of utility service when they signed the contracts.
Enron attorney A. William Urquhart said the company would seek an emergency
stay from the U.S. Court of Appeals in San Francisco.
Enron has a responsibility to its shareholders to act in the company's
economic interest, Urquhart told Hamilton.
He said the universities have not paid any more for power since Feb. 1 than
they did before and have suffered no power blackouts. Any future financial
losses could be compensated in damages, avoiding the need for an injunction,
Urquhart said.
But attorney Douglas R. Young, representing the universities, said the
direct-service contract contained unique benefits. For example, he said,
meters installed by Enron that were removed Feb. 1 provided information that
enabled the schools to monitor and reduce electricity use building by
building,
to qualify for a new statewide demand-reduction program.