Daily GPI / NGI All News Access

Enron Drops Palm Springs

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.

©Copyright 1999 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1231
Comments powered by Disqus