Enron’s California customers analyze their power options

By Karen Gaudette, The Associated Press
Friday December 21, 2001

SAN FRANCISCO — The roughly 40,000 California customers of fallen energy giant Enron Corp. are in a pickle. 

If they cling to their contracts with the Houston-based energy seller, they’ll likely keep saving thousands of dollars on their electricity and natural gas bills, but with the chance the suddenly bankrupt Enron could abruptly end their service. 

If customers voluntarily end their Enron contracts, they fear that state power regulators — who banned such energy-buying arrangements in September — will herd them back to local utilities to help the state pay its $10 billion power tab after buying electricity to avoid rolling blackouts. 

Companies and institutions from the University of California, the nation’s largest university system, to McDonald’s Corp. are closely watching the Public Utilities Commission as it begins assessing how Enron’s bankruptcy could affect energy reliability in California. 

“We’re kind of in a holding pattern,” said San Francisco Giants spokeswoman Staci Slaughter. The Giants play at Pacific Bell Park, which gets its power from Enron and has a huge Enron sign on its center-field scoreboard. 

Buying through Enron has “certainly been a beneficial cost savings for us,” Slaughter said. 

Enron customers asked PUC officials at a hearing Thursday under what circumstances they could contract with a replacement electricity provider, said Carl Wood, a PUC commissioner. 

Whether companies who signed contracts with Enron before the ban can arrange for a new provider is “a question of interpretation of the law,” Wood said. 

Calls to Enron for comment Wednesday and Thursday were not returned. 

Before the ban, roughly 80,000 large California businesses and institutions opted for “direct access” — buying their power from Enron and other energy sellers rather than local utilities. Such arrangements slashed energy costs, particularly when power prices soared earlier this year. 

Direct access advocates say customers should not be blocked from finding a replacement for Enron. 

“As it stands right now, customers could go out and sign with a new (energy service provider). The question is, would the utilities accept what’s called the direct access service request,” said Dan Douglass, legal counsel for the Alliance for Retail Energy Markets, an industry group that backs direct access. 

Pacific Gas and Electric Co., Southern California Edison and consumer advocates say direct access customers should return to their utilities. Doug Heller of the Foundation for Taxpayer and Consumer Rights said that would spread the state’s power debt around more customers and ease the chance of future rate hikes. 

The Department of Water Resources, which since January has bought electricity for the customers of three struggling utilities, just wants to know how much power it needs to buy to supply everyone, said Oscar Hidalgo, a DWR spokesman.  

If all customers came back, the DWR would need to buy from 800 to 1,400 megawatts extra electricity, Hidalgo said. 

The sooner DWR has an estimate, the more money it will be able to save by arranging for power deliveries ahead of time rather than buying it at the last minute, Hidalgo said. 

Enron’s customer service already is lagging, despite letters to customers saying it will continue to serve them, Edison told the PUC in a filing. 

PG&E already has begun serving former Enron natural gas customers, said Christy Dennis, a PG&E spokeswoman. The utility reclaimed the customers after an Enron affiliate was unable to prove it would pay PG&E, Dennis said. 

Enron, which had revenues of $100.8 billion in 2000, filed for bankruptcy Dec. 2 after a dramatic collapse triggered by revelations of questionable partnerships, four years of overstated profits and a failed merger with rival Dynegy.