By Karen Albrecht
Daily Bruin Reporter
Energy prices for the University of California and the
California State University will not increase after a preliminary
injunction was issued against Enron Energy Services Wednesday by a
federal judge in San Francisco.
The Houston-based energy company is attempting to unilaterally
change a four-year contract that has provided power at 1998 prices
to the California university systems.
But attorneys for Enron filed an immediate appeal with the ninth
U.S. Circuit Court in an attempt to overturn the judge’s
decision, according to company spokeswoman Peggy Mahoney.
“In the hearing, Enron said it was costing them money to
keep up the contract, so the financial burden should be shifted to
California taxpayers,” said Charles McFadden, University of
California Office of the President spokesman.
According to a UCOP statement, changes would mean that UC and
CSU would transfer from Enron and become customers of Pacific Gas
and Electric and Southern California Edison a year before the
contract expires on March 31, 2002.
U.S. District Judge Phillis Hamilton issued a preliminary
injunction at the hearing, forcing Enron to continue services
outlined in the contract while the suit against them proceeds.
Mahoney said the energy buying and selling process is suffering
because consumers have indirect access to utilities within the
state.
“Power comes from PG&E, PG&E sends us the bill,
and we’re paying their rate, then we send the final bill to
UC and CSU who pay the rate that they’re under contract for
with us,” Mahoney said. “We’re not getting paid
by the utility. It doesn’t make sense.”
The problem, according to Mahoney, is that Enron must absorb the
significant difference in cost between the bill from the California
utility companies and the tariff rate Enron charges.
If Enron succeeds in breaking the contract, UC and CSU would be
responsible for absorbing that difference.
Enron is continuing to act in the best interest of its
customers, Mahoney said.
Attorney General Bill Lockyer, appearing in court on behalf of
the two university systems, argued that Enron wants out of the
contract to engage in a “marketing game,” and sell the
university-promised power on the market at 10 times the rate it was
purchased by Enron, according to the Associated Press.
UCLA’s energy contract is not with Enron, but with the Los
Angeles Department of Water and Power. UC Riverside also has a
separate energy contract. The UC and the CSU are two of the largest
energy users in California. The university spends approximately $87
million annually on electricity and $26 million on natural gas.
The UC and the CSU also argued that Enron’s proposed
contract changes could potentially cost California taxpayers
millions, in a time when large rate increases have already been
felt across the state, according to UCOP. Hamilton indicated there
is a strong possibility that the UC and the CSU will prevail if the
issue comes to trial. The CSU’s annual electric bill is about
$40 million.