In addition to reporting lower financial results and cutting its full-year earnings guidance in its quarterly 10-Q with the Securities and Exchange Commission (see Daily GPI, Dec. 24), Mirant also disclosed multiple accounting errors in previous financial statements. The company also told the SEC that it has received a subpoena from the U.S. attorney for the Northern District of California asking for details about possibly reporting inaccurate gas and power price information to the trade press.

Mirant said it received a subpoena in November requesting information about its activities and those of its subsidiaries since Jan. 1, 1998. “The subpoena requests information related to the California energy markets and other topics, including the reporting of inaccurate information to the trade press that publish natural gas or electricity spot price data. The subpoena was issued as part of a grand jury investigation. Mirant intends to cooperate fully with the United States Attorney’s office in this investigation,” the company said.

The Commodity Futures Trading Commission (CFTC) last week ordered Dynegy Corp. subsidiary Dynegy Marketing and Trade and affiliate West Coast Power LLC to pay a fine of $5 million to resolve charges they colluded to manipulate natural gas prices for more than two years by submitting bogus trading information to energy newsletters that publish gas price indices.

Mirant also disclosed that it expects an ongoing reaudit to result in the “restatement of its statement of income for either or both of 2000 and 2001 and potentially for interim periods in 2001 and 2002.”

The company reported last summer that it had identified several accounting errors related to its risk management and marketing operations. Subsequent to the announcement, Mirant determined that there was no $100 million overstatement of an account payable and reconciled a potential $68 million overstatement of an accounts receivable asset referenced in a July 30 press release. The resolution of the $68 million item did, however, indicate that earnings for the first quarter of 2002 were understated by $16 million, and previously reported second quarter 2002 earnings were overstated by $16 million, Mirant said.

The company also determined the cumulative impact of the previously disclosed $85 million overstatement of a natural gas asset and recorded after-tax charges totaling $42 million in its Dec. 31, 2001 retained earnings balance. The specific periods within previous years to which the $42 million relates have not been determined at this time but will be determined by the ongoing audit by KPMG, Mirant said. So far the company has determined that corrections to taxes, asset values, accrued power revenues and other items have resulted in a $51 million income reduction in 2001.

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