Out-of-state power generators that have taken much of the flack for all that’s gone wrong in California’s electricity markets on 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 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,” Dynegy 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,” Stengel added.

“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. The allegations made in the suit “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,” she added. Richard Wheatley, spokesperson for Reliant, told NGI that the assertions made in the lawsuit are “false, defamatory and totally without merit.” Meanwhile, Paula Hall-Collins, a spokesperson for Williams, said, “In our estimation, 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 early Wednesday, with Duke subsequently confirming the proposal later in the day (see Daily GPI, May 3).

Generators contacted by NGI steered clear of offering any kind of direct comment 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 on Duke’s proposed settlement.

Meanwhile, Davis has offered to meet with the generators to talk about the state’s ongoing power woes, but several of the companies remained noncommittal as to 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 next Tuesday (May 8), he went on to say, but 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 attend 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 told NGI. But he also said that details related to the logistics and content of such a meeting remain sketchy at this point. 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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