These clauses might help two of the California textile industry’s larger players get out of contracts holding them to gas prices quadruple the current market value.
“I suppose Enron placed those clauses thinking they might need protection from this industry,” said Scott Edwards, executive director of the Association of Textile Dyers, Printers and Finishers. “Anyone who couldn’t lock into a contract went out of business last summer.”
Enron declared bankruptcy in early December.
Edwards estimated 35 percent of the ATDPF’s 200 members chose Enron as a supplier during the height of the state’s energy crisis last summer, when a number of gas-dependent firms, including the region’s largest, LA Print & Dye, shuttered.
According to Edwards, Tissurama Industries, the largest remaining player, has the bankruptcy clause in its Enron contract. Tissurama declined to comment.
Henry Bassett, president of dyer and finisher Swiss Tex Inc., estimated his deal with Enron has cost the firm $1 million. Last summer, he locked in at $9.20 per decatherm of gas; the spot market is currently at $2.15.
Bassett has retained a lawyer. In the meantime, he wrote Enron of his plans to begin using another supplier as of Feb. 1, with a rate of $2.85 per decatherm.
“We presented our intentions in a letter sent registered mail and got no response, though we called them on several occasions,” Bassett said.
Most smaller printers, dyers and finishers lack the bankruptcy clause in their contracts, but Edwards said the association is lobbying the Public Utilities Commission to follow rule 35, which prohibits a bankrupt marketer from operating in state.
“We’re basically seeking an injunction from the court to get the state to follow its own law,” Edwards said.
Enron spokesmen couldn’t be reached at press time.