----- Forwarded by Jeff Dasovich/NA/Enron on 03/13/2001 10:55 AM -----

	Jennifer Rudolph@EES
	03/13/2001 10:52 AM
		 
		 To: CA Team
		 cc: 
		 Subject: LA Times Press on uc/csu lawsuit

LA Times
Today



Tuesday, March 13, 2001 
UC, Cal State Systems Sue Power Seller to Retain Pact's Low Prices 


Electricity: Officials want to prevent Enron from switching their accounts to 
Edison and PG&E. They fear losing discounted rates. 
By MASSIE RITSCH, Times Staff Writer


Faced with losing their protection from sky-high electricity bills, the 
University of California and California State University have sued to stop 
their power supplier from halting service. 
The UC and Cal State systems signed a four-year contract with Enron Energy 
Services in 1998, locking into discounted fixed rates for electricity from 
the Houston-based energy giant. 
Last month, Enron notified its commercial and industrial customers in 
California, including the universities, that their power would be supplied by 
Pacific Gas & Electric and Southern California Edison. 
Because of the complicated rules of the state's deregulated utility market, 
the shift saves Enron money, but the universities fear that it could subject 
them to the fluctuating--but always expensive--prices that most Californians 
have been paying recently for power. 
UC and Cal State accuse Enron of breaking its contract so that it can sell 
power earmarked for the campuses to other customers for more money. 
On Friday, the public universities asked the U.S. District Court in Oakland 
to issue a preliminary injunction to stop the switch-over. No hearing has 
been scheduled, UC spokesman Charles McFadden said. 
"We don't object to Enron making more money," McFadden said. "What we do 
object to is Enron seeking to increase their profits at the expense of 
California's students, parents and taxpayers." 
Enron denied Monday that the company will resell power to boost profits, and 
an executive guaranteed that, for this final year of its contract with the 
universities, Enron will reimburse them for any increase in their power bills 
when they return to the customer rolls of PG&E and Edison. 
"All the value that caused the [UC and Cal State systems] to want a contract 
with us, we are retaining. . . . The only reason we did [this] is because we 
found a better cost alternative to keep us in the game," Enron Vice Chairman 
Marty Sunde said. 
The universities estimate that their contract with Enron has saved their 
campuses $30 million. Being returned to the in-state power suppliers could 
cost them an additional $132 million to $297 million over 10 years, they say. 
That figure includes the cost of switching meters on the campuses and 
changing billing systems. More significant, the higher price the universities 
would pay for power would include a projected rate increase that would help 
PG&E and Edison reduce the billions in debt they have incurred in 
California's deregulated electricity market. 
While other colleges in the state pay super high rates for power, UC, Cal 
State and Enron have proudly promoted their arrangement. In January, the 
university systems put out a news release that extolled the contract and 
assured that electricity rates would remain stable until at least March 31, 
2002, when the contract was scheduled to expire. 
When the agreement was reached in 1998, Enron said it was "honored" to serve 
UC and Cal State, and the firm boasts on its Web site that the university 
systems are "notable customers." 
"We were and are proud of the contract," UC's McFadden said. "That's why 
we're fighting so hard to preserve it." 
UC and Cal State are among the state's biggest consumers of electricity, 
paying more than $125 million annually for power. Both systems meet a portion 
of their power needs by generating electricity at on-campus plants. 
Not all of the universities' campuses have been served by Enron. UCLA, for 
example, buys its power from the Los Angeles Department of Water and Power, 
and UC Riverside purchases it from the city of Riverside.