Savings Expected in State’s New Power Deal
California renegotiated an electricity contract with Allegheny Energy Supply Co. to save the state $836 million over 10 years, Gov. Gray Davis announced Tuesday.
The contract is one of dozens signed by the California Department of Water Resources in 2001, when the state was trying to stabilize wholesale electricity after a deregulation experiment led to price spikes and blackouts.
The new contract reduces the amount of power the state must buy and shaves prices slightly. In return, the state has agreed to withdraw complaints filed with federal energy regulators against Allegheny. Originally expected to cost the state $4.2 billion, the new contract is priced at $3.6 billion, according to Davis attorney Bill Kissinger.
In all, the state has renegotiated 30 long-term electricity agreements to save $6 billion, according to Davis advisors.
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