Enron Sues LP Over Power Contract

PORTLAND, Ore. -- - Enron has sued Louisiana-Pacific for $4.4 million claiming the Portland-based company wrongfully ended a power contract.

Enron Sues LP Over Power Contract Associated Press - August 13, 2003 Enron says the maker of building products owes it $4.4 million for supplying power under the contract, plus $59,200 in damages for its alleged failure to accept electricity deliveries.

The outcome could affect the resolution of thousands of Enron contracts. Enron, which owes creditors about $67 billion, has said it expects to recoup about $4.4 billion from contracts for natural gas, power, coal and other commodities.

Louisiana-Pacific General Counsel Mark Fuchs said the company rescinded its contract when it learned of the Houston company's fraudulent manipulation of West Coast energy markets in 2000.

"Enron's misrepresenting its position, as well as the manipulation of the market, caused us to enter into the contract," Fuchs said.

Other former business partners have tried to back out of deals based on "meritless theories of fraud," according to the Enron lawsuit filed Tuesday in U.S. Bankruptcy Court in Manhattan in New York.

Louisiana-Pacific signed power-purchase agreements with an Enron unit in September 2000 and June 2001, according to the lawsuit.

The deals were intended to supply power for its Missoula, Montana, particleboard mill. Under the contract, Louisiana-Pacific could lock in a set price for power during the life of the agreement, from 2001 through 2007.

When the companies negotiated the contract, energy prices were soaring and companies in power-intensive industries such as building products sought ways to stabilize prices in long-term contracts.

"We felt we had to get some certainty," Fuchs said.

In January, LP terminated the contract, saying Enron had manipulated the power prices that prompted the company to enter into the contract.

Last fall, Timothy Belden, former head of Enron's Portland-based electricity trading desk, pleaded guilty to illegally conspiring to manipulate California energy markets during the power crisis of 2000-2001.

Belden had signed the contract with Louisiana-Pacific on behalf of an Enron subsidiary, Fuchs said.

``We were paying a higher rate at a time when we shouldn't have been paying a higher rate,'' Fuchs said.

Louisiana-Pacific sold the mill in January for $20 million to Roseburg Forest Products. Fuchs said the dispute would not affect Roseburg.

Enron filed for bankruptcy protection in December 2001, weeks after the company wrote off $1 billion in failed investments and admitted hiding $1.2 billion in losses through off-the-books partnerships. The filing was the largest U.S. bankruptcy at the time by all measures and remains the largest when ranked by debt.