The Federal Energy Regulatory Commission last Wednesday accepted a settlement valued at nearly $500 million in which Mirant settled with various California parties and FERC staff on a wide range of issues stemming from the 2000-2001 energy crisis in the West.
The global settlement resolves claims to refunds for power sales Mirant made during the crisis, as well as claims for damages. It also addresses pending proceedings involving gaming and disgorgement of unjust profits, revocation of market-based rate authority, generation withholding and long-term contract disputes.
The settlement addresses Mirant's obligation in the California refund proceeding. The agreement requires Mirant to assign to the California parties approximately $283 million in receivables claimed by Mirant, plus another $37 million associated with Mirant's sales in the day-ahead market administered by the now-defunct California Power Exchange. The agreement also addresses any interest due on the assigned funds.
The California parties are: the state of California, the California Attorney General, the California Department of Water Resources, the State Water Resources Department, the California Energy Oversight Board, California Public Utilities Commission, Pacific Gas & Electric Co., Southern California Edison Co., and San Diego Gas & Electric Co.
The agreement further calls for Mirant to support the California parties' unsecured claim of $175 million in the bankruptcy proceeding involving Mirant Americas Energy Marketing Inc. A bankruptcy judge will determine the ultimate value of that claim.
Also, the agreement provides an opportunity for other market participants to join the settlement agreement as additional settling participants. By opting into the settlement, a participant will receive any refunds or offsets against amounts owed in accordance with an allocation matrix specified in the agreement. If participants do not opt into the agreement, they may still pursue claims in the refund proceeding without benefit of the agreement. By the same token, Mirant would be free to litigate all issues with respect to non-settling parties.
FERC noted that the settlement marks the latest in a long history of actions the Commission has taken both during and in response to the Western energy crisis, including creation of the Office of Market Oversight and Investigations, behavioral rules and adoption of clear and unambiguous market rules.
Including last week's action, the Commission has now accepted or helped bring about more than $4.6 billion in monetary settlements in the wake of the Western energy crisis. In the ongoing Enron gaming proceeding, Commission trial staff have recommended that the company be required to forfeit more than $1.6 billion. The pending refund proceeding is expected to produce final refunds of about $3 billion.
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