More than four years after rolling blackouts and skyrocketing electricity bills shook California and the rest of the West Coast, the Enron Corporation finally settled claims that it played a major role in the energy crisis of 2000 and 2001.
Enron, the former highflying energy trader now operating under bankruptcy protection, announced yesterday that it had reached an agreement to pay as much as $1.52 billion to the State of California and other parties.
But actual payouts are likely to be only a fraction of that amount. Under the bankruptcy plan, Enron will pay unsecured claimants – and California is one of them – about 20 cents on the dollar on average, said Jennifer Lowney, a spokeswoman for Enron.
Enron and other power companies are accused of gouging consumers by artificially inflating electricity prices during the California energy crisis. The crisis led to billions of dollars of surcharges for consumers and businesses on the West Coast.
One of the fastest-growing companies in America in the 1990’s and a star on Wall Street, Enron collapsed into bankruptcy in December 2001 amid accusations of widespread financial irregularities and fraud. It is now facing an estimated $65 billion in claims from investors, consumers, employees and government agencies it defrauded. Against that, the company’s estate is valued at about $13 billion, and Enron has so far paid out $580 million to claimants in other cases, Ms. Lowney said.
Enron’s rapid fall was the first in a string of accounting and financial scandals that rocked corporate America. The company’s former chairman, Kenneth L. Lay, and former president, Jeffrey K. Skilling, are under federal indictment on fraud charges. Their trial is scheduled for January 2006.