SACRAMENTO, Calif. (AP) - California’s attorney general announced a proposed settlement Friday with Atlanta-based Mirant Corp. that would resolve allegations of price gouging by the company during California’s 2000-2001 energy crisis.
The $700 million-plus agreement would require Mirant to forgive nearly $300 million owed it by three California utilities - Pacific Gas and Electric Co., Southern California Edison Co., and San Diego Gas and Electric Co. – and the California Department of Water Resources.
It also would allow the utilities to claim $175 million during Mirant’s bankruptcy proceedings expected to be completed by midyear.
Attorney General Bill Lockyer said PG&E would receive another $250 million in long-term electrical power or possibly ownership of one of Mirant’s California power plants to resolve allegations that the company overcharged the utility during the crisis.
In a statement, the attorney general said hoped Mirant’s new management “will work constructively with California to make sure history does not repeat itself.”
The settlement was approved Thursday by the California Public Utilities Commission, but still needs approval from the Federal Energy Regulatory Commission and two bankruptcy courts overseeing bankruptcy proceedings of Mirant and PG&E.
The settlement, which would resolve two lawsuits filed by Lockyer, including one alleging violations of federal antitrust laws, is the latest among several deals the state has reached with energy companies accused of manipulating California’s power crisis.
Previous settlements include a $1.7 billion deal with Houston-based El Paso Corp. and a $1.4 billion discount on a $4.3 billion energy contract with Tulsa-based Williams Cos.
More than a year ago, FERC also negotiated a $3.7 million payment from Mirant to the state to settle claims by California regulators that it improperly sold reserve electricity meant to be used only for emergencies.
The company, which generates electricity in the U.S., the Caribbean and the Philippines, continued Friday to deny that it had violated laws during the energy crisis. But company officials said the deal removes “significant financial uncertainty from Mirant’s economic future.”
The settlement would allow the firm to continue operating and expand its California facilities. Mirant owns three California power plants, in San Francisco, Pittsburg and Antioch.
California’s problems began in May 2000 when a booming economy, drought conditions in the West, an ill-fated deregulated energy market and manipulation of that market brought on skyrocketing electricity prices.
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On the Net:
Mirant Corp.: http://www.mirant.com
Attorney General Bill Lockyer: www.ag.ca.gov
AP-ES-01-14-05 2130EST
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