By Michelle HackneyContributor
Who’s got the power now that Enron’s contract with the CaliforniaState University and University of California systems will soonexpire?
For now, no one’s sure.
The CSU and the UC systems entered into a direct access serviceagreement with Enron in 1998 that provided them with millions ofdollars in savings. This month, the four-year contract will expire,leaving loose ends and questions as to where the campuses will turnfor continuing electrical power.
“Nine months ago, Enron agreed to a two-year extension to ouragreement with them,” Scott Burns, Physical Plant director, said.”This was before they declared bankruptcy, so we’re really lefthanging, waiting to see what is to come of them and waiting to see ifwe’ll transfer to another provider who is willing to participate.”
The legalities of this contract extension are still under seriousscrutiny by the Public Utilities Commission, but the Enron contractwill be honored until the expiration date.
Enron has been under investigation since it filed for bankruptcyin December. Lawsuits against the company claim that employees whopurchased Enron stock were cheated out of their money as Enronexecutives released false financial statements, artificiallyinflating the price of company securities.
Customers, such as the CSU and UC systems, who have great energyneeds have had two options in the past for purchasing electricalservice.
Since 1995, customers have chosen from either bundled service, inwhich one utility provider is paid for all utility services, ordirect access, which offers distribution and transmission servicespurchased from one utility provider.
Twice now, the PUC has postponed voting on a draft that wouldsuspend direct
access indefinitely. If the PUC adopts this draft decision, CSUand UC campuses may face increased costs of up to $24 million a year.
Gordon Shackelford, chair of the University Senate Committee onAcademic Resources and Planning, said the campus is waiting for ratedecisions. He said there will be a 40 percent to 50 percent rateincrease in San Diego Gas and Electric if the draft passes.
The PUC will vote March 21.
Shackelford and Burns said PUC Commissioner Geoffrey Brown hasproposed an alternative plan that would allow the CSU and UC systemsto maintain direct access and continue to save while meeting theirenergy needs.
This proposal protects the rights of direct access customersregarding extensions and renewals of the Enron contract. If theychoose, customers may also reassign their contracts to other serviceproviders under the commissioner’s plan.
“This plan seems to be leading the way as far as the draft votinggoes,” Burns said. “We still need Enron to agree with transfers andwe need other providers to participate, but the question is, willanyone find Enron creditworthy?”
Campus administrators said they worked with Enron because thecompany had a “good marketing strategy” and offered ample opportunityto save money.
“This is why we went ahead with them,” Burns said. “They couldhave been a success story with the leverage that they possessed andthe hype that they built up for themselves.
“These guys were smart. They just didn’t deliver.”
Burns said the university invested $750,000 into conservationtechnologies last year. Physical Plant implemented a program thatprovided energy-saving information to faculty and staff throughcampus e-mails.
The Physical Plant also offered itself as an on-call generatorthat shed 10 percent of the university’s energy load during therolling blackouts.
“Until we know exactly what’s going on, we’re relying on everybodyright now to keep our energy costs down,” Burns said. “Turn stuffoff; it all helps.”
