Enron Corp. on Friday said that it has reached agreements to settle all civil and contractual claims between the company, including certain of its subsidiaries, and three parties -- FERC trial staff, the city of Santa Clara, CA, and Valley Electric Association Inc.
The settlements relate to electricity and natural gas transactions in the Western U.S. from 1997-2003 and resolve all claims between these parties and Enron under proceedings before the FERC and the bankruptcy court for the southern district of New York, including claims raised in the FERC's partnership and gaming proceeding initiated during 2002-03.
Under the FERC trial staff settlement, FERC will receive a $400 million penalty claim against Enron Power Marketing Inc. (EPMI), an Enron subsidiary, which is a subordinated claim under Enron's confirmed Chapter 11 Plan of Reorganization.
FERC trial staff will also receive an allowed $5 million unsecured claim against EPMI, which will be allocated and assigned to Santa Clara ($4 million portion) and Valley Electric ($1 million portion), and an allowed unsecured claim against EPMI up to $10 million in the aggregate, for the benefit of all non-settling participants in the partnership and gaming proceeding who are actually allocated disgorgement amounts by FERC and have a valid proof of claim against EPMI.
Under the Santa Clara settlement, Enron will receive a $36.5 million settlement payment from Santa Clara related to electricity contracts terminated in 2002, and Santa Clara will receive an allowed unsecured bankruptcy claim of $4 million against EPMI, which is being assigned to Santa Clara by trial staff.
In the settlement with Valley Electric, Enron will receive an $8 million settlement payment from Valley Electric related to electricity contracts terminated in 2002, and Valley Electric will receive an allowed unsecured bankruptcy claim of $14 million against EPMI, which includes the $1 million claim assigned to it by trial staff.
Under the Santa Clara and Valley Electric settlements, Enron and the other parties will dismiss and release all claims and proceedings against one another and both Santa Clara and Valley Electric will be entitled to receive distributions on their allowed unsecured claims under Enron's plan of reorganization.
The settlement agreements follow Enron's recent settlements concerning the western energy market with the attorneys general of California, Oregon and Washington, Pacific Gas & Electric Co., San Diego Gas & Electric Co., Southern California Edison and the California Department of Water Resources, among other parties, that closed in November 2005. The three settlement pacts also follow on the heels of a settlement with Nevada Power, Sierra Pacific Power and Sierra Pacific Resources that closed in January 2006.
Upon the closing of the three settlements announced Friday, Enron will have successfully resolved claims with all parties in the FERC's partnership and gaming proceeding against whom Enron has also filed adversary proceedings in the bankruptcy court for the collection of termination payments under wholesale energy contracts, except for the Public Utility District No. 1 of Snohomish County, WA and the Metropolitan Water District of Southern California.
The three settlements are subject to the approval of the FERC and the bankruptcy court for the southern district of New York.
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