Generators Decry Lawsuit, Mull Possible Davis Meeting

Out-of-state power generators that have taken much of the flak for all that's gone wrong in California's electricity markets last Thursday blasted a recent lawsuit by California Lt. Gov. Cruz Bustamante and Assemblywoman Barbara Matthews that accused the companies of engaging in illegal price fixing activities. As they prepare to wage war on yet another legal front, those same generators are mulling whether now is the right time to sit down with California Gov. Gray Davis to discuss the state's energy crisis.

The lawsuit alleges that Dynegy Inc., Duke Energy, Mirant Inc., Reliant Energy Inc. and Williams Energy Services have combined to create or carry out restrictions in trade or commerce and limit or reduce the production of electricity. The suit also asserts the generators combined to increase the price of electricity, prevent competition in the making and sale of power and illegally control the price of electricity to the public and consumers. "A cartel of five out-of-state generators has been holding us hostage through a practice of illegal and unfair price fixing," Bustamante said in announcing the lawsuit. "With this lawsuit, we are drawing the line in the sand," he added. The suit, filed last Wednesday in Los Angeles Superior Court and brought by Bustamante and Matthews as private citizens, also named the CEOs of each company individually as defendants.

The generators are already offering up a strong set of rebuttals to the lawsuit. "Dynegy has stated repeatedly that we've acted appropriately and within the law and in California," company spokesman Steven Stengel told NGI. "This suit does nothing to address the central issues that are facing California and that is the need to increase supply and reduce demand, and we feel that everyone's time would be better spent working on solutions rather than assessing blame," he said.

"We have done nothing wrong," asserted Brian O'Neill, a spokesman for Mirant. Representatives for Duke Energy and Reliant were equally adamant in their denial of the charges made in the lawsuit. They "are the same old allegations that have been thrown at the power generators over and over," said Duke spokesperson Jennifer Hillings Epstein. "As far as Duke Energy is concerned, they're simply not true." Richard Wheatley, spokesperson for Reliant, also called the assertions made in the lawsuit "false, defamatory and totally without merit." Meanwhile, Williams spokeswoman Paula Hall-Collins said this " is just another class-action suit in which Williams is confident we're going to prevail in showing that there's been no illegal actions taken in our business practices with California."

News of the lawsuit came on the heels of media reports that Duke Energy had proposed a global settlement and a wide ranging three-year California energy plan to Davis. First word of the proposed settlement came from the New York Times and the Los Angeles Times last Wednesday, and later was confirmed by Duke Energy. Key elements of Duke's proposed settlement include a willingness by the company to build new supply in the state without taxpayers having to foot the bill and resolution of all pending lawsuits and investigations into Duke's pricing activities.

Generators contacted by NGI refused to comment directly on Duke's proposed settlement. "I can only speak for our own company, and we are not engaged in any discussions or negotiations with the state of California for any type of settlement," Reliant's spokesperson said. "Mirant is encouraged by any steps taken toward a comprehensive solution to California's energy crisis," Mirant's O'Neill told NGI. "It's really not our place to comment on what Duke and the governor are discussing," responded Dynegy's Stengel. Williams also declined to comment.

Meanwhile, Davis has offered to meet with the generators to talk about the state's ongoing power woes, but several of the companies haven't decided yet whether they will accept the invitation. "I can confirm that we've received an invitation," said Mirant's O'Neill. He noted that the company received a letter dated May 1 from the governor's chief of staff. The scheduled date for the proposed meeting was originally this Tuesday (May 8), he said, but it has since been pushed back to Wednesday (May 9).

"We're actively considering it," O'Neill said with respect to Davis' offer. Reliant also confirmed that it has been invited to the meeting with the governor, but the company has not made any final decisions related to the invitation. "To the best of my knowledge, we have received a phone call from the governor's office," Dynegy's Stengel said. He said details about what will be discussed at the meeting were sketchy. Williams also confirmed receiving an invitation from Davis, and the company's spokesperson said that the company will "more than likely" participate in the meeting.

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