PG&E;’s Lawsuit Against State Is Dismissed

A Pacific Gas & Electric Co. lawsuit against the state alleging breach of contract and seeking $4.1 billion was dismissed by a Sacramento County Superior Court judge Thursday.

The utility had claimed the state owed it for money lost when it couldn’t sell its power plants or the energy produced in them at market rates as promised under a 1996 deregulation law.

At the height of the energy crisis in January 2001, California lawmakers passed a law prohibiting PG&E; and other utilities from selling their power plants until at least 2006. The utility argued that the law breached an agreement between the utility and the state.

Judge Joe S. Gray said the deregulation law wasn’t a contract, so the claim should be dismissed.

The law required utilities to sell most of their power plants, turn over management of their transmission lines to an independent grid operator and open their distribution system to competition.

In return, the utilities would be allowed to sell their power plants or sell energy from their nuclear and hydroelectric plants on the open market.

By not selling power from those plants on the open market, PG&E; estimates it lost at least $4.1 billion in potential revenue.