Reliant settles with California utilities
Reliant becomes the last major independent power producer to settle with utilities and the state of California after years of allegations that energy wholesalers had gouged an already-fragile market at a time when the state desperately needed more electricity.
The settlement, subject to approval by state and federal regulators, included PG&E Corp.'s Pacific Gas & Electric Co. unit, Edison International's Southern California Edison unit and Sempra Energy's San Diego Gas & Electric unit.
The three California utilities said the settlement was worth $525 million, including $65 million in refunds previously ordered by federal regulators.
PG&E said its share of the settlement was about $230 million, while Edison pegged its portion at more than $130 million, and San Diego Gas & Electric said its piece was just more than $42 million.
Reliant said in a statement the total value was $445 million.
A Reliant spokeswoman said the discrepancy stems from the accounting treatment the company applied to receivables on its books. While the utilities may recognize the settlement as $525 million based on their own accounting, the spokeswoman said, from Reliant's perspective the economic value was $445 million.
According to Edison, it would be the third-largest settlement by an independent generator in California to date, after El Paso Electric Co.'s $1.7 billion deal in March 2003 and Enron Corp.'s $1.52 billion deal in July 2005.
Reliant will take an estimated $350 million pretax charge in the third quarter. The company said as part of the deal it will waive claims to receivables for power deliveries from Jan. 1, 2000, to June 21, 2001, plus interest.
Reliant also said the settlement would resolve pending class-action suits and state investigations. The utilities said attorneys general in Oregon and Washington were also party to the settlement.
Representatives from the three utilities were not immediately available to explain the accounting involved in the deal, although some of the settlement included accounting for receivables. Also, other state parties were involved in the deal.
Shares in Reliant and Sempra were fractionally higher, and shares in Edison and PG&E similarly lower, in early Monday trade on the New York Stock Exchange.
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