The University of California and California State University have jointly filed a preliminary injunction to prevent Enron Energy Services, Inc. from allegedly altering a contract signed in 1998.
Under the contract, Enron supplies the UC and CSU with energy through Southern California Edison or Pacific Gas and Electric at a fixed price. The deal also brought in sophisticated meters that monitor energy use, which has helped both universities save a considerable amount of money.
On Feb. 1, 2001, Enron sought to return UC and CSU to the electrical distribution and billing systems of SoCal Edison and PG&E.
“A move by Enron to escape the requirements of the UC-CSU contract would mean higher profits for Enron, but it has the potential for costing California students, parents and taxpayers hundreds of millions of dollars in additional expenses,” Joe Mullinix, UC senior vice president for business and finance said in a press release.
This is an accusation that Enron firmly denies.
“[Mullinix] is speculating,” said Peggy Mahoney, an Enron spokesperson. “The rates are not changing concerning direct energy. We have spoken directly with both universities and have been notified of this transition.”
Both universities said legal action must be taken to resolve this issue.
“The California State University believes it is paramount that our status as a direct-access customer be retained in this time of uncertainty resulting from the state’s energy crisis,” CSU Executive Vice Chancellor and Chief Financial Officer Richard West said in a statement. “Enron’s unilateral action is a clear breach of the terms of our agreement and must be challenged. We have made extensive efforts to negotiate our return to direct-access status to no avail and we are now taking legal action to correct this situation.”
Under the proposed changes, Enron would make the UC and CSU potentially liable for paying billions of dollars in debts accumulated by SoCal Edison and PG&E. Both universities would lose the high-tech meters that allow campuses to conserve energy, said Charles McFadden, UC vice president for business and finance.
“We will lose meters that do a good job saving us money. It was a monumental job converting thousands of accounts from PG&E and SoCal Edison to Enron,” McFadden said. “Enron even admitted that going back and changing the accounts would cost millions and millions.”
However, the Enron spokesperson stated the Enron meters would be placed next to SoCal Edison and PG&E’s meters, providing the information to the UC and CSU campuses and Enron.
The four-year contract was to have lasted until March 31, 2002. UCLA and UC Riverside have separate contracts.
The injunction was filed in Oakland federal court March 12. The ruling will be held today in San Francisco.