Enron Forking Over $1.5B To States

Bankrupt energy company Enron Corp. has agreed to pay more than $1.5 billion to resolve claims that it gouged California and other western states during the 2000-01 energy crisis, state officials said.

The settlement will end market manipulation and price-gouging claims against the once high-flying Houston-based company, California Attorney General Bill Lockyer said. The agreement requires approval by the Federal Energy Regulatory Commission.

Enron will pay $47.5 million in cash and provide California with an unsecured claim for $875 million in the energy company's bankruptcy proceedings. Oregon and Washington will recieve $22.5 million each from that unsecured settlement.

In addition, the three states will share a $600 million penalty.

The deal will allow California to "squeeze justice from this corporate turnip," Lockyer said. "All things considered, this is a good resolution for the state's ratepayers."

Enron's ultimate payments to the states won't be known until its bankruptcy proceedings end, Lockyer spokesman Tom Dresslar said.

Lockyer has painted Enron as the mastermind of California's energy crisis, which was marked by blackouts and soaring consumer energy prices. He accused the company of using trading schemes to drive up the cost of electricity in the state's newly deregulated market.

About $65 billion in claims are awaiting settlement in Enron's bankruptcy case, company officials said.

California had sought nearly $9 billion in refunds for overcharges by dozens of energy companies. Wholesale energy prices hit all-time highs during the crisis.

The state has been negotiating settlements with many of the energy companies through the Federal Energy Regulatory Commission. The Enron deal announced Friday is the second-largest of the state's energy settlements, behind a deal valued at greater than $1.6 billion with Houston-based El Paso Corp.

FERC Chairman Joseph T. Kelliher said the settlement with Enron brings to nearly $6 billion the amount of refunds related to the energy crisis negotiated through the commission.

"The dark cloud of litigation and regulatory uncertainty has been hanging over California for five years now," Kelliher said in a statement Friday. "That's too long. It's time for all of us to step up to the plate and resolve these remaining issues."