The federal bankruptcy judge in Enron Corp.’s Chapter 11 proceeding cleared the way Thursday for Sierra Pacific Resources’ two Nevada utilities to appeal an earlier judgment ordering them to pay more than $330 million in penalties for a busted power supply contract with Enron that was broken off last year. The judge stayed his previous decision ordering the utilities to pay Enron in lieu of them posting bonds and cash while they pursue appeals through federal regulators and the courts.

Sierra Pacific Resources’ CEO Walter Higgins reiterated that the Nevada utilities — Nevada Power Co. and Sierra Pacific Power Co. — should not have to pay Enron for power that was not delivered under a contract that was terminated (and the penalties enacted) after the Nevada utilities’ credit ratings were dropped below investment grade in the 2001 western energy crisis, which Enron is alleged to have made worse with its wholesale market manipulation schemes.

The company said in a prepared statement late Thursday that it would have “no further comment until it has received and reviewed the court’s final stay order.”

U. S. Bankruptcy Judge Arthur Gonzalez’s ruling stays his earlier order in favor of Enron through the posting into escrow by the Nevada utilities of $338 million of general and refunding bonds secured by the companies’ assets, along with approximately $280,000 in cash for prejudgment interest. In addition, within 90 days of the judge’s stay becoming effective, the utilities also will pay $35 million in cash to escrow.

“The judge’s ruling now allows us to move forward with our appeal,” Higgins said.

Late last month, Nevada’s two U. S. Senators, Harry Reid and John Ensign, filed a joint motion to intervene in the federal regulatory process for the ongoing brouhaha between their state’s two major private-sector electric utilities and bankruptcy-mired Enron’s power marketing affiliate. One of the senator’s spokespersons indicated it was “unusual” for a member of Congress to intervene in a case at the Federal Energy Regulatory Commission.

The two Nevada utilities have a complaint pending at FERC to try to stay or reverse the impact of the earlier bankruptcy court order that the utilities pay Enron. The Nevada Public Utilities Commission Oct. 29 approved a financial package for the utilities to put up collateral while they seek other remedies through the federal appeals courts. The regulators’ action may have helped to influence Judge Gonzalez.

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