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FERC Accepts Enron-Sierra Pacific Western Crisis Agreement

FERC last Wednesday accepted an agreement by Nevada Power and Sierra Pacific Power, units of Sierra Pacific Resources, with Enron Corp. that resolves issues outstanding from the 2000-2001 western energy crisis.

The settlement resolves claims arising from transactions and events in western energy markets, including markets of the California Independent System Operator and the California Power Exchange, for the period from January 16, 1997, through June 25, 2003, as they relate to Enron.

FERC said the settlement is a comprehensive effort by the parties to end their litigation and resolve their legal disputes in a way that does not affect the rights of others to continue to litigate their claims in the underlying proceedings.

The agreement resolves myriad legal disputes between the Nevada companies and Enron that are the outgrowth of commercial dealings between the companies during the settlement period. From 1997 to May 7, 2002, Enron sold power to the Nevada companies in both spot and forward market transactions.

Under the terms of the settlement, Enron will allow, in favor of the Nevada utilities, a Class 6 general unsecured claim under the Enron debtors' plan of reorganization of $126.5 million in the bankruptcy proceeding of Enron Power Marketing Inc. The utilities will pay Enron $129 million as termination payments arising from Enron's termination of certain forward power contracts with Nevada Power and Sierra Pacific Power in May 2002.

The settlement provides that Nevada Power's payment allocation of this total will be $89.784 million and Sierra Pacific Power's payment allocation will be $39.216 million.

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