Sierra Pacific: Enron decision a major victory

The biggest financial threat faced by Sierra Pacific Resources was defused although certainly not eliminated last week.

A federal judge in New York overturned a bankruptcy court ruling that would have required the Reno-based utility to pay nearly $337 million to Enron.

Sierra Pacific Resources, the parent company of Sierra Pacific Power in northern Nevada and Nevada Power Co.

in Las Vegas, steadfastly has contended that it shouldn't be required to pay anything to Enron.

After all, Sierra Pacific officials contend, Enron manipulated the Western energy markets in the winter of 2000-2001.

That brought a decline in the credit rating of Sierra Pacific.

Enron, claiming a financially weakned Sierra Pacific was in violation of its contract to buy power, demanded the cash as a termination payment.

A bankruptcy judge agreed with Enron.

Federal District Judge Barbara Jones, however, agreed with Sierra Pacific's appeal and sent the case back to the bankruptcy court.

"Instead of a $337 million judgment,we have a fresh page," said Michael Yackira, executive vice president and chief financial officer of Sierra Pacific Resources."We think it's extremely important."

The decision was particularly heartening, Yackira said, because the federal judge gave specific direction about issues she believes the bankruptcy court should hear.Many of those, he said, are the issues that Sierra Pacific particularly wants to air.

Even though the decision was overturned, no timing has been set for the bankruptcy court to give a new hearing to Enron's demand that Sierra Pacific pay damages.

At the same time, however, the Federal Energy Regulatory Commission is conducting hearings of its own on whether Enron should be allowed to collect termination payments from Sierra Pacific.

Those hearings, originally scheduled for last week, now are delayed until mid- December.

Enron's lawyers requested the delay, saying they needed more time to produce more than 900,000 pages of documents that Sierra Pacific has demanded.

Yackira said Sierra Pacific officials believe their case is bolstered by continued disclosures of steps taken by Enron executives to manipulate the financial and energy markets before the Houston-based company collapsed and sought bankruptcy protection.

And he said a favorable decision by federal regulators might carry some influence over the bankruptcy court case.

Even while Sierra Pacific executives celebrated the decision to overturn the $337 million judgment, there's always a possibility that a major judgment could be levied against the company even after a new proceeding.

In fact, the company's information to investors continues to list the Enron question as a serious risk to its future well-being.

Still,Yackira said, the company has made significant progress cleaning up the many financial issues that once left it teetering on the edge of its own bankruptcy filing.