---------------------- Forwarded by Joseph Alamo/NA/Enron on 04/11/2001 05:29 
PM ---------------------------


	Joseph Alamo
	04/11/2001 05:28 PM
	
To: Miyung Buster/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:  

Subject: "Enron Told to Supply UC, Cal State"
Wednesday, April 11, 2001 ,2001 San Francisco Chronicle

Enron Told to Supply UC, Cal State 
Wednesday, April 11, 2001 ,2001 San Francisco Chronicle 
A federal judge ordered the energy giant Enron today to restore direct 
electric service to the University of California and the California State 
University system, under agreements that Enron wanted to abandon so it could 
sell the power for more money elsewhere. 
Houston-based Enron Energy Systems signed four-year contracts with the two 
university systems in 1998, agreeing to supply power for 5 percent less than 
the price cap set by the state's 1996 deregulation law. 
The contracts were due to run through next March, but Enron dropped direct 
service to the universities on Feb. 1 and left them to rely on power supplies 
from Pacific Gas & Electric and Southern California Edison Co., while Enron 
brokered electricity sales at much higher prices on the spot market. 
Enron promised to keep its promise of low rates for the rest of the contract, 
but the universities said the change to utility service would hurt their 
conservation efforts and expose them to the risk of blackouts. 
Joined by Attorney General Bill Lockyer, who said the public interest was at 
stake, university lawyers argued successfully today for an injunction 
restoring direct access. 
The language of the contracts indicates that "Enron did not have the right to 
return the university systems to the utilities," said U.S. District Judge 
Phyllis Hamilton. 
She cited the "precarious position of PG&E," which filed for bankruptcy last 
Friday, and said the universities had bought some protection from the risks 
of utility service when they signed the contracts. 
Enron attorney A. William Urquhart said the company would seek an emergency 
stay from the U.S. Court of Appeals in San Francisco. 
Enron has a responsibility to its shareholders to act in the company's 
economic interest, Urquhart told Hamilton. 
He said the universities have not paid any more for power since Feb. 1 than 
they did before and have suffered no power blackouts. Any future financial 
losses could be compensated in damages, avoiding the need for an injunction, 
Urquhart said. 
But attorney Douglas R. Young, representing the universities, said the 
direct-service contract contained unique benefits. For example, he said, 
meters installed by Enron that were removed Feb. 1 provided information that 
enabled the schools to monitor and reduce electricity use building by 
building, 
to qualify for a new statewide demand-reduction program.