Judge Denies Effort to Scrap Utility's Pacts

The agreements stemmed from Mirant's purchase of power plants and some power-supply contracts from Pepco in June 2000 for $2.65 billion. Under the arrangement, Mirant reimburses Pepco for the cost of buying power from third-party generators.

The ruling came from Judge John McBryde of the United States District Court for the Northern District of Texas, Fort Worth Division.

The reimbursed electricity purchases are at fixed prices above current levels and are "draining tens of millions of dollars per month" from Mirant, the company, which is based in Atlanta, said in a bankruptcy court filing.

Pepco, along with the Federal Energy Regulatory Commission, opposed the attempt by Mirant to use bankruptcy law to terminate the contracts, saying Mirant required the commission's approval, Pepco said in a statement.

In October, Pepco, which is based in Washington, agreed to pay Mirant more money in a related contract dispute involving below-market power sold to Pepco.

Representatives from Pepco and Mirant were not immediately available for comment.