Some large commercial and industrial customers who had signed energy contracts with the now-bankrupt Enron are forced to pay their utility bills a second time.
Although it is difficult to say how widely this double-billing phenomenon is spread, E Source has contacted dozens of corporate energy managers who had signed energy or energy services contracts with Enron. In several cases, energy managers paid Enron for their energy and distribution costs, but Enron failed to remit payment to the local distribution company. With Enron stuck in Chapter 11 reorganization hearings, the distributors have not been paid, so they have issued a duplicate bill to the end user. In a couple of cases, shut-off notices accompanied duplicate bills.
"We're looking at these bills and saying, 'Hold on a minute,'" said one corporate energy manager who asked not to be identified. "We don't even have a contract with these guys. Our contract was with Enron." Nevertheless, these bills are generating concern among current and former Enron clients.
The double-billing situation has been creating quite a dilemma for those Enron customers not yet released from their Enron contracts by the bankruptcy court. "We feel we should be paying Enron, but if we do, we have no guarantee that they'll pay the final bill," said the energy manager. "On the other hand, if we pay these guys [the local utility], we could get hauled into bankruptcy court and be forced to pay Enron." Or worse, the bankruptcy judge could rule such actions a violation of their Enron contract, which in turn may or may not have further legal or financial ramifications.
However the legal issues shake out, large energy users clearly recognize the financial imperatives of keeping the gas and electricity flowing to their facilities. "Enron is no longer providing a service to us" said Andrew Clinton, director of global energy for Owens Corning. "We need to take care of our own business interests."
Even worse than deciding how to handle the bills going forward is being forced to pay the same bill twice. "We paid Enron, but they haven't paid the bills to our original supplier, who is now telling us we're in arrears X number of dollars. Someone needs to pay, or off go the lights," said an energy manager with a West Coast property management firm. "I don't know if they'll really shut us off, but our main concern is with the tenants occupying one of our 400,000-square-foot commercial office spaces. What will we tell them?"
Although none of the energy managers E Source contacted disputed the need for distribution companies to collect payment for services rendered, a few resented being placed in the middle. This type of action symbolizes the sort of thinking that drove them away from utilities in the first place.
None of the energy managers E Source spoke with planned to return to their local utilities at the end of their Enron contracts, unless they were forced to do so. All had made the vital cultural leap toward working with competitive energy service companies. "Who wants to go back to those chaotic rate schedules and the uneven service?" asked one energy manager.
If utilities intend to recapture any of their former large commercial or industrial customers, they will do well to emulate the competitive spirit and nontraditional thinking that attracted these large energy users to Enron and their fellow energy service providers in the first place.
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