California’s attorney general announced Friday the state has made final an amended version of its previously announced $417 million settlement with Tulsa-based Williams Companies regarding a renegotiated 10-year power contract that is reduced by $1.4 billion in terms of the state’s obligations.

The amendment includes a provision allowing California Attorney General Bill Lockyer the go-ahead to continue investigating possible civil or criminal violations by the company from 1998 to the present related to natural gas price indexes, an issue that has arisen since the Nov. 11 initial settlement was announced (see Power Market Today, Nov. 18). Initially, the state AG has only a six-month period in which to do that investigation, but if it needs more time it can get an extension, AG office spokesperson told news media late Friday.

The final settlement also allows the AG to retain the right to pursue any evidence of “willful fraud or criminal conduct at the company.” The state AG just completed a due-diligence period conducted in on-site investigations at Williams headquarters. It was set to expire Sunday (Dec. 15).

“We conducted our due-diligence, which involved reviewing 400 boxes of data and conducting 45 interviews,” said Tom Dressler, state AG spokesperson. “We’re satisfied we can stick with the agreement.”

While continuing to deny any civil or criminal guilt, Williams agreed in the settlement to pay the state $417 million to settle two pending state lawsuits and the state AG’s investigations, along with lowering the overall value of the power supply contract. As part of the new contract, Williams agreed to increase maximum supplies through 2010 from 1,400 MW to 1,875 MW, but give the state more flexibility in when the power is dispatched, and it signed a long-term natural gas supply agreement through 2010 for 1.2 to 1.8 million MMBtus/month, while getting a release from any future refund determinations as they relate to the state (see Power Market Today, Nov. 12).

Also in return, Williams retains the right to charge the state $62.50/MWh to $87/MWh for the supplies.

At the time of the original deal announcement, state officials said the value of the deal to California could be characterized as being worth more than $1.6 billion, but because there was a $180 million overlap between the lower contract value and the settlement amounts on the pending litigation, the $1.4 billion was established a net total for the benefits.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.