Avista deal part of indictment

One of the numerous charges leveled against ex-Enron executives, including former CEO Kenneth Lay, hits a little too close to home for Spokane-based Avista Corp.

In 2000, Avista bought a gas-fired combustion turbine in Oregon from Enron for $59.5 million. Due to the way Enron structured the deal, the transaction is one of many listed by prosecutors as examples of how Enron attempted to falsely beef up earnings and conceal debt from auditors and the public.

The description of the transaction comprises two paragraphs in a 65-page indictment filed in U.S. District Court in Texas on Wednesday. The document was unsealed Thursday.

Avista executives said the company has provided investigators all the information asked for regarding the transaction.

“This is about Enron being investigated. They’re not investigating Avista,” said Ron Peterson, Avista’s vice president for energy resources. “Enron did lots of business with lots of people, and we were just one of the parties.”

In early 2000, Enron decided to sell a turbine and plant in Oregon called Coyote Springs II. During that time, there was a waiting list to buy turbines, which were in high demand due to spiking power prices. Avista made an offer to buy the turbine, land and a construction contract to finish building the facility.

However, the indictment says, Enron asked Avista to buy the turbine prior to closing the rest of the sale. Avista did not want to buy the turbine ahead of time, with no guarantee that it would be able to purchase the rest of the assets, so Enron arranged a deal that allowed Avista to sell the turbine back if the rest of the deal fell through, Peterson said.

“We don’t know why they wanted to do that,” Peterson said. “We had no knowledge of Enron’s internal dealings.”

The indictment says Enron officials hid from its auditors the $3.54 million Avista paid to an Enron affiliate to secure the transaction. Around the same time, Enron also paid its affiliate $3.54 million to complete the transaction, $3.19 million of which was agreed would be refunded, the indictment says.

After some delays, Avista eventually completed construction on the plant, which began operations in July 2003 before being shut down due to mechanical problems. Avista expects the plant to begin running again later this month, Peterson said.

“We have been told directly by the U.S. attorney that no one connected with Avista is a target of the investigation,” Avista spokesman Hugh Imhof said. “We have been fully cooperating with this investigation.”