Sues

The federal Internal Revenue Service earlier this month sued Public Service Company of New Mexico (PNM), alleging the utility received $4.2 million in 1998 and 1999 income tax refunds and claimed even more based on accounting methods that the IRS now contends were bogus. The allegations were made in a lawsuit filed in a federal district court, noting that PNM supposedly made the claims on the advice of its accounting firm, Deloitte & Touche LLP.

A Eureka, CA-based small biomass power generation operator filed a lawsuit in federal district court in the Eastern District of California naming a dozen major energy suppliers in the West for allegedly manipulating wholesale natural gas prices in 2000-2001, causing prices to spike and greatly increase the cost of its power at biomass plants using timber waste.

Promising continued legal actions and citing a “shocking disregard for public welfare,” California Attorney General Bill Lockyer last week filed a civil lawsuit in an East San Francisco Bay state Superior Court against Houston-based Enron Corp., alleging unfair business practices and violations of the state’s commodity law. The state court filing came three days after his office asked FERC to reconsider a refund order directed at the state last month.

The Securities and Exchange Commission (SEC) reached a settlement last week with CMS Energy and a former CMS executive, Terry Woolley, over charges that the company engaged in $5 billion in deceptive round-trip energy trades. The SEC also filed civil lawsuits against two other CMS officials for allegedly orchestrating and hiding the round-trip trades.

Nevada Power Co. last Wednesday filed a federal lawsuit against Southern Nevada Water Authority (SNWA), several officials with the Colorado River Commission (CRC) and a former Enron Corp. trader in which Nevada Power alleges that the defendants manipulated western power markets in 2000-2001 at the expense of the Nevada-based electric utility.

The Securities and Exchange Commission (SEC) reached a settlement agreement Wednesday with CMS Energy and Terry Woolley, the former controller of CMS’s energy trading subsidiary, over charges that the company engaged in $5 billion in deceptive round-trip energy trades. The SEC also filed civil lawsuits against former CMS Marketing, Services and Trading (CMS MST) CEO Tamela C. Pallas and former CMS Chief Accounting Officer Preston D. Hopper for allegedly orchestrating and hiding the round-trip trades.

AEP, which bought the Houston Pipe Line system, including 4,000 miles of intrastate pipeline in Texas, from Enron in June 2001 for $727 million, at the time also signed a 30-year lease for the 7,000-acre underground Bammel storage reservoir and related pipeline facilities. The pre-paid lease also included a right to renew for an additional 20 years.

American Electric Power (AEP) said two of its affiliates, Houston Pipe Line Co. and AEP Energy Services Gas Holding Co., filed lawsuits on Friday against Enron and Bank of America in the Enron bankruptcy proceeding, seeking clarification on previous contract agreements regarding the 52 Bcf Bammel storage field and related pipeline assets in Harris County, TX.

Trans-Elect on Thursday filed suit in the Federal District Court of Northern Illinois (Chicago) against Illinois Power on the grounds that the utility violated the terms of a contract to sell its transmission system to Trans-Elect. The move comes after Dynegy Inc. last month disclosed that it is in talks to sell its Illinois Power unit to Exelon Corp.(see NGI, Sept. 29).