El Paso Electric Seeks Deal With FERC in Calif. CaseDec 6, 2002 | Bloomberg News
El Paso Electric Co. has taken a step toward settling federal allegations that the utility owner conspired with Enron Corp. to manipulate power prices during California's energy crisis.
The Texas power supplier would refund $14 million and stop wholesale electricity trading for two years under an agreement with Federal Energy Regulatory Commission trial staff, El Paso Electric said in a statement. The company would be the first power seller to settle allegations of California market manipulation if the commission approves the accord.
FERC staff accused El Paso Electric of letting Enron run its transmission system as part of a plan to inflate power prices. The claims arose from a broader investigation into whether manipulation by Enron and other companies helped spark a tenfold jump in power prices during California's energy crisis in late 2000 and early 2001.
''This may set a precedent for settlement with other parties in this case, such as California,'' said Argus Research analyst Jeffrey Gildersleeve, who has a ''hold'' rating on El Paso Electric and doesn't own any of its shares. Energy trading was a small part of El Paso Electric's business, and the $14 million the company agreed to refund is ''manageable,'' he said.
The agreement wouldn't resolve separate claims by California officials, El Paso Electric's statement said. Other parties, such as California cities and regulators, would be allowed to push for a higher refund or other sanctions when El Paso Electric's case goes before the federal commission in April. The company admitted no wrongdoing in the settlement agreement.
Shares of El Paso Electric rose 86 cents to $11.11 in New York Stock Exchange trading. It was the biggest gain since July 24. The stock has fallen 23 percent this year.
El Paso Electric last week said its profit will fall as much as 40 percent this year, worse than the projection it made in October, because of mild weather and higher costs.