July 18 2002 – Eight power sellers are close to finalizing settlements with California to resolve the state’s complaints about long-term electricity contract prices, an administrative law judge with the Federal Energy Regulatory Commission said on Thursday.
California is trying to renegotiate some $43 billion worth of long-term supply contracts that were signed last year at the height of the state’s power crisis. The state claims that it was overcharged by as much as $21 billion, with some contracts selling power at $249 per MWh Power is currently trading in the state’s spot market for about $30 per MWh.
Curtis Wagner, FERC’s chief law judge, said in a report he will hold a meeting on August 5 and 6 to finalize some settlements. Wagner said he was “optimistic that many, if not all, of these eight sellers will reach settlement.”
Settlements in principle have already been achieved with four sellers, he said. “Several of these offers are global in nature and would resolve all pending claims, including those in the refund case and those in the California state courts,” Wagner said in a two-page report.
However, two electricity sellers do not have tentative agreements and “it does not appear that settlement is a viable option for them,” Wagner wrote. A hearing will be scheduled for early October for companies unable to reach a settlement with the state by next month.
The judge did not identify the companies that are close to settlements, nor the dollar amount involved. In April, California said it reached an agreement with five power generators to cut the price of some long-term contracts, saving the state about $3.5 billion. Those agreements were reached with Calpine Corp, Constellation Energy Group and three small producers of renewable energy.
Wagner held settlement talks in California earlier this month. The state’s water agency stepped in to buy electricity for California in January 2001 after the two biggest utilities in California ran out of cash and credit. The power crisis triggered a series of rolling blackouts and forced one utility into bankruptcy.
The state’s demand for renegotiations is pending before FERC in case number EL02-62. Companies involved in the case include:
* Sempra Energy
* Williams Cos
* Dynegy Inc
* Mirant Corp
* Allegheny Energy
* Coral Power, a unit of Royal Dutch/Shell Group
* El Paso Corp
* Morgan Stanley Capital Group
* Scottish Power Plc’s PacifiCorp
* PG&E Corp’s energy trading unit
* Williams Cos.