Enron Drops Palm Springs
Enron Corp. has eliminated the last vestiges of its one-time
high-profile venture into California's residential electricity
market by pulling out of its deal with the resort city of Palm
Springs. Enron was the energy service provider for a city
government-established aggregation business, which had about 2,000
mostly residential customers lured away from the local monopoly
provider, Southern California Edison.
Under provisions of its contract, the city was supposed to draw
at least 25% of the potential customer base into its municipal
aggregation program by Jan. 1, 1999.
That goal was never realized, with only between 8 and 10%
joining the aggregation effort. With those numbers, "it wasn't
economically feasible to continue," said a Houston-based Enron
Capital and Trade spokesperson. A former city official said Enron
wanted the city to guarantee it wouldn't lose money. The city
refused to do that. The Palm Springs city council has decided to
continue offering its more than 42,000 residents and businesses an
alternative source of power by signing a deal with New West Energy,
a subsidiary of Phoenix, AZ-based Salt River Project, the nation's
third largest government-run electric utility. A certified energy
service provider (ESP) in California, New West is working with
Enron to take over responsibility for 1,700 residential accounts,
guaranteeing a 2 percent discount over Edison's rates, and it is
planning to negotiate with 335 commercial customers who have
separate individual contracts with Enron that have yet to expire.
When they do, New West will attempt to negotiate new deals as part
of the city aggregation under Palm Springs Energy Services.
Palm Springs city council approved the switch to New West last
week (April 21).
The city was caught off guard by Enron's pullout but closed a
new deal with New West within a matter of weeks, rather than the
six to nine months it took to finalize an original contract with
Enron, said Dallas Flicek, Palm Springs assistant city manager who
has overseen the city's electricity aggregation under California's
restructured electricity industry.
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