posted on Monday, November 21, 2005 10:17 AM by Andrea Robinson

FERC Approves Enron-California Settlement

FERC approved a $1.5 billion settlement between Enron and the plaintiff group known as the California parties, as well as the attorneys general of Oregon and Washington, and FERC staff.  The settlement resolves claims and matters arising from transactions in the western energy markets from January 16, 1997, through June 25, 2003.   

The settlement includes an $875 million unsecured claim against Enron in the bankruptcy proceeding, a $600 million civil penalty in favor of the California, Oregon and Washington attorneys general, and cash or cash equivalence of $47.4 million.  Ominously for others who did business with the disgraced energy giant, the settlement also requires Enron to cooperate with the settling parties in their claims against other entities related to events in the Western energy market.  

The settlement has also been approved by the California Public Utilities Commission and the United States Bankruptcy Court for the Southern District of New York, which is adjudicating Enron's bankruptcy.  FERC's order noted that the value and timing of the settlement's $875 million unsecured claim in the bankruptcy proceeding is uncertain due to the ongoing bankruptcy litigation.  

FERC Chairman Joseph Kelliher called the Enron settlement a turning point in the agency's efforts to bring closure to the 2000-2001 Western energy crisis.  He also attributed the settlement to FERC's "strong enforcement posture."  Combined with the Chairman's recent statements in support of FERC's Office of Market Oversight and Investigations, its seems clear that the agency intends to emphasize its market oversight and enforcement roles.