Enron Corp. has eliminated the last vestiges of its one-timehigh-profile venture into California’s residential electricitymarket by pulling out of its deal with the resort city of PalmSprings. Enron was the energy service provider for a citygovernment-established aggregation business, which had about 2,000mostly residential customers lured away from the local monopolyprovider, Southern California Edison.

Under provisions of its contract, the city was supposed to drawat least 25% of the potential customer base into its municipalaggregation 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’teconomically feasible to continue,” said a Houston-based EnronCapital and Trade spokesperson. A former city official said Enronwanted the city to guarantee it wouldn’t lose money. The cityrefused to do that. The Palm Springs city council has decided tocontinue offering its more than 42,000 residents and businesses analternative source of power by signing a deal with New West Energy,a subsidiary of Phoenix, AZ-based Salt River Project, the nation’sthird largest government-run electric utility. A certified energyservice provider (ESP) in California, New West is working withEnron to take over responsibility for 1,700 residential accounts,guaranteeing a 2 percent discount over Edison’s rates, and it isplanning to negotiate with 335 commercial customers who haveseparate individual contracts with Enron that have yet to expire.When they do, New West will attempt to negotiate new deals as partof the city aggregation under Palm Springs Energy Services.

Palm Springs city council approved the switch to New West lastweek (April 21).

The city was caught off guard by Enron’s pullout but closed anew deal with New West within a matter of weeks, rather than thesix to nine months it took to finalize an original contract withEnron, said Dallas Flicek, Palm Springs assistant city manager whohas overseen the city’s electricity aggregation under California’srestructured electricity industry.

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