The nation’s largest municipal utility, the Los Angeles Department of Water and Power (LADWP), said Monday its legal counsel is currently assessing whether the giant city-run utility will file a lawsuit against Houston-based Reliant Energy for in excess of $200 million of alleged overcharges in a 1999-2001 natural gas supply deal, according to LADWP’s General Manager David Wiggs. “We’ll know in a couple of weeks whether we’ll go ahead with a lawsuit,” Wiggs said during a brief interview Monday with NGI.

“There isn’t a lot I can tell you about it; the attorneys (LA city attorney’s office and outside counsel) have been looking at it on contracts that were before I was here, and it appears (from an audit) from everything else that has come out that based on some of what the Reliant gas traders were doing, we may have a cause of action under that (former) contract. We’ll know a lot more in the next few weeks, and a decision then will be made as to whether a case is filed.”

Whether or not legal action is taken, Wiggs said, the estimate of $218 million in alleged overcharges is a firm estimate. Along with $170 million that LADWP claims it is still owed by the California Independent System Operator (CAISO) and now-defunct California Power Exchange (Cal-PX), the muni’s claims of monies due from the state’s 2000-2001 power crisis would far exceed the maximum exposure in the ongoing Federal Energy Regulatory Commission “show-cause” proceeding involving up to 60 wholesale market participants from both the private and public sectors. Wiggs puts that maximum exposure at “under $50 million.”

The proposed Pacific Gas and Electric Co.-California Public Utilities Commission settlement could “move along” the reimbursement from the state, Wiggs said. It is still not clear what the pending FERC case would do to the ultimate net amounts of monies coming to LADWP, he said.

“We at least (following last week’s FERC decision) have a process set up for us to be able to demonstrate why we should not be giving back any money,” said Wiggs, adding that the city utility still is awaiting details from FERC on when the hearing will be held.

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