California to Cover Enron Customers

SACRAMENTO, Calif. – California power officials are ready to keep the lights on for Enron Corp.'s customers should the bankrupt energy provider cut off the power.

The move, announced Tuesday, marked a turnaround from last week when it refused to help Enron line up power for its customers, citing credit concerns.

The turnaround marks how far the state has come since a year ago, when generators refused to sell energy to California utilities for the same reason, said Power Authority Chairman S. David Freeman.

State power officials are preparing to cover up to 1,200 megawatts of energy that Enron supplies within California. Among Enron's direct access customers are the University of California and California State University systems.

Enron, which had revenues of $100.8 billion in 2000, filed for bankruptcy Sunday after a dizzying fall triggered by revelations of questionable partnerships, four years of overstated profits and then a failed merger with rival Dynegy.

If Enron defaults on its direct access customers, state power officials will find a way to provide seamless electrical service to its customers. DWR is prepared to supply the 800 to 1,200 megawatts of direct-access service to Enron customers.

An Enron spokeswoman didn't immediately return a call from The Associated Press seeking comment.

Enron sold some customers on thinking they would get cheaper power, Freeman said, and now may not deliver it. The company has sent letters "telling some customers they may not supply them."

In September, the Public Utilities Commission banned direct access, which lets customers bypass a utility and contract for power from an energy marketer, such as Enron.

The PUC's three-month delay in banning direct access let many customers defect from utilities and sign on with Enron and other providers.

That meant fewer customers remained to pay off the debts the state built buying power at high wholesale rates and selling to customers, including those who later signed up for direct access, under capped rates.

An Enron defaults, Freeman said, could send those customers back to the utilities, which would help the state pay that debt.

UC spokesman Charles McFadden said the system was watching the Enron situation and officials were talking with the company "almost constantly."