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Posted on 08/28/2002 6:40:30 AM PDT by snopercod
WASHINGTON, Aug 27 (Reuters) - California on Tuesday said it reached a deal with power company GWF Energy LLC to settle all its outstanding claims against the firm and pare $215 million off the cost of its 10-year electricity contract.
GWF, held in part by Public Service Enterprise Group Inc. (NYSE:PEG) of Newark, New Jersey, is one of about two dozen firms that signed $43 billion in long-term energy deals last year with California at the height of the state's power crisis.
The state claims it was overcharged by as much as $21 billion by those firms, and is also seeking $9 billion in refunds for short-term power purchases it made in 2000-2001 amid blackouts and the bankruptcy of its biggest utility.
GWF said the new deal is global, meaning it settles all outstanding legal issues with California.
"As far as we're concerned this settles all issues with California for us," a company spokesman said.
Under the new contract, GWF will sell California 340 megawatts (MW) of power over 10 years for $776 million, down from $991.2 million.
It will also proceed with construction of a 164-MW plant in Tracy, California, to start up in mid-2003. GWF already built two 88-MW plants as part of the original deal signed in May 2001. One megawatt is enough to power roughly 1,000 homes.
The renegotiated contract also halves to 2,000 the number of hours of electricity supplied during peak demand hours in 2003. The per-megawatt terms of the deal were not disclosed.
The settlement drops active complaints filed at the Federal Energy Regulatory Commission (FERC) by the California Public Utilities Commission and California Energy Oversight Board.
GWF is owned by a 50/50 partnership between PSEG Global of Parsippany, New Jersey, and Harbert Cogen of Birmingham, Alabama. PSEG Global is a subsidiary of PSEG.
GWF was among the firms actively renegotiating their contracts in informal talks at FERC, the spokesman said.
A total of eight firms -- including Dynegy Inc. (NYSE:DYN), El Paso Corp. (NYSE:EP) and Sempra Energy (NYSE:SRE) -- face an Aug. 30 deadline to settle their long-term contracts in a new round of talks set to start at FERC on Wednesday.
If settlements are not reached, a FERC administrative judge will launch a formal hearing that will likely leave the cases in limbo for months or years.
The agency is separately considering California's demand for $9 billion in refunds for short-term power purchases.
In April, California reached an agreement with five independent power generators, including Calpine Corp. (NYSE:CPN) and Constellation Energy Group Inc. (NYSE:CEG), to cut the price of some contracts by $3.5 billion, a 23 percent price drop.
California said it will continue to purchase power from GWF's existing facilities through December 2011 and from the new Tracy facility through October 2012.
"We restructured this deal to be fair and affordable," said Pete Garris, deputy director of the state's water department, which manages the group's power purchasing division, charged with buying power on behalf of the state's utilities.
Bought too much on your little $24 billion credit card spree, eh Doofus?
To buy votes and favor with the Davis administration.
And people say our legal system is the model for the world?
I'd like to here from some of the Freepers on here that are well connected on this subject matter to put in perspective just how much of a savings this really is.
Is this just a political story about a pittance of savings - like Clinton's release of oil from the oil reserves that the media made such a big deal out of but really turned out to be enough to run the country for 10 minutes.
It looks to me like GWF is getting less money because they are providing less electricity. Davis will claim this as a victory over the "energy pirates", of course.
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