Enron Agrees To Settle Price-Gouging Claims

(AP) SACRAMENTO Bankrupt energy company Enron Corp. has agreed to pay $47.5 million in cash in a settlement that could eventually top $1.5 billion to resolve claims that it gouged California and other western states during the 2000-2001 energy crisis.

The settlement will end market manipulation and price gouging claims against the once high-flying Houston-based company, California Attorney General Bill Lockyer said Friday. The agreement requires approval by the bankruptcy court and the Federal Energy Regulatory Commission.

In addition to the cash payment, Enron will provide California with an unsecured claim for $875 million in the energy company's bankruptcy proceedings. Oregon and Washington would be entitled to $22.5 million each from that unsecured settlement.

The settlement also calls for the company to pay a $600 million penalty to the three states.

All the payments except for the cash settlement represent unsecured claims, which often generate payments of only a fraction of the face value. The final payment amounts will depend on what is left after Enron's secured creditors are repaid as part of the bankruptcy proceedings.

The deal will allow California to "squeeze justice from this corporate turnip," Lockyer said. "All things considered, this is a good resolution for the state's ratepayers."

The settlement helps Enron move forward to resolve its bankruptcy "so that we can accelerate distributions to all other creditors," Enron's interim chief executive officer, Stephen Cooper, said in a statement Friday.

About $65 billion in claims are awaiting settlement in Enron's bankruptcy case, company officials said.

Lockyer has painted Enron as the mastermind of California's energy crisis, which was marked by blackouts and soaring consumer energy prices. He said the company of using trading schemes to drive up the cost of electricity in the state's newly deregulated market.

California had sought nearly $9 billion in refunds for overcharges by dozens of energy companies. Wholesale energy prices hit all-time highs during the crisis.

The state has been negotiating settlements with many of the energy companies through the FERC. The Enron deal announced Friday is the second-largest of the state's energy settlements, behind a deal valued at greater than $1.6 billion with Houston-based El Paso Corp.

FERC Chairman Joseph T. Kelliher said the settlement with Enron brings to nearly $6 billion the amount of refunds related to the energy crisis negotiated through the commission.

"The dark cloud of litigation and regulatory uncertainty has been hanging over California for five years now," Kelliher said in a statement Friday. "That's too long. It's time for all of us to step up to the plate and resolve these remaining issues."