State Reaches Accord With Dynegy, NRG
California officials have reached a $281.5-million settlement with Dynegy Inc. and NRG Energy Inc. over allegations of widespread abuses during the state’s energy crisis, Atty. Gen. Bill Lockyer said late Monday.
The state had accused a joint venture owned by the two firms, known as West Coast Power, of withholding power and conducting Enron Corp.-style trading schemes to push up the price of electricity during 2000 and 2001.
Much of the settlement money would benefit ratepayers, but it was unclear exactly how much would trickle down to customers and in what form -- in bill credits, by offsetting other utility charges or through some other means.
The California Public Utilities Commission and the Federal Energy Regulatory Commission must approve the accord. If they do, state regulators will drop their financial claim against West Coast Power and FERC will end its investigation into the firm’s conduct during the energy crisis.
But the role Dynegy played in the crisis remains of interest to the attorney general’s office. It is looking into allegations that the Houston-based company engaged in price gouging and made unjust profit from its California operations.
“This settlement provides Californians with a measure of justice from one of the most rapacious pirates of the energy crisis,” Lockyer said in a statement. “We will continue, in the courts, to seek full justice for ratepayers and full accountability for Dynegy.”
Said Bruce A. Williamson, chief executive of Dynegy: “We are pleased to reach this agreement with the parties involved, and we appreciate their efforts to resolve the issues from the past so that we all may continue to focus on providing safe and reliable electricity to the citizens of California.”
Officials at Minneapolis-based NRG couldn’t be reached for comment.
The settlement underscores the complexity of the ongoing energy disputes. Like other power suppliers, West Coast Power had claimed that California utilities still owed large sums for electricity they received during the energy crisis, when power prices were skyrocketing. The utilities and other California officials have claimed that, instead, power suppliers owe them large refunds for overcharges arising from unlawful market manipulation.
The largest part of Monday’s agreement would defuse the dispute over money that the suppliers have claimed they were owed by utilities.
According to Lockyer, the overall $281.5-million figure includes at least $256.4 million in monetary relief for ratepayers. It would be delivered by Pacific Gas & Electric Co., Southern California Edison Co., San Diego Gas & Electric Co. and the California Department of Water Resources.
PG&E;, for example, plans to apply its $82.3-million share of the settlement toward the $2.2- billion bill that customers are paying over time as part of the utility’s bankruptcy reorganization plan. The $34.4-million refund to SoCal Edison and the $16.5-million refund to SDG&E; could have an indirect effect on customer rates by offsetting other utility costs that would normally be borne by ratepayers.
Given the many questions, one consumer activist expressed guarded support for the deal.
“If it’s in the range of $250 million, that is serious money,” said Mike Florio, senior attorney at the Utility Reform Network, based in San Francisco.
At the same time, he added: “What the California parties gave up is what they might have gotten by pursuing court appeals.”
PUC President Michael Peevey said the commission would closely review the agreement’s terms. But he added, “I’m pleased that this settlement appears to be another step in repairing some of the damage done to the state during the energy crisis.”
A FERC spokesman declined to comment on the specifics of the deal. It was in California’s interest to resolve the energy crisis disputes, the spokesman said, “to create the sort of climate we need for renewed investment in the California marketplace.”
One piece of the overall agreement, involving a $3-million settlement between the companies and FERC, was reported in January.
Earlier this month, the Justice Department brought the first criminal charges against a company for misconduct during the market meltdown, accusing Reliant Energy Services of unlawfully forcing up prices in June 2000.
State officials have completed seven settlements stemming from the energy crisis totaling $2.37 billion, Lockyer said. The settlements include a $1.8-billion deal reached in November 2002 with power supplier Williams Cos.
