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State Sues 2 Power Firms

Courts: Federal antitrust violations, price gouging alleged. Attorney general urges the sale of some Reliant, Mirant plants.


SACRAMENTO -- Atty. Gen. Bill Lockyer sued two electricity companies Monday, alleging that they exert illegal control of California's electricity market and should be forced to sell power plants.

Lockyer sued Reliant Energy of Houston and Mirant Corp. of Atlanta in federal court in San Francisco. He accuses the companies of violating federal antitrust laws, stifling competition and illegally driving up prices.

The suits "are aimed at restoring real competition by requiring these energy companies to sell off some of their power plants," said Lockyer.

His lawsuits are the latest of several legal attacks on energy companies that profited during California's 2000-01 electricity crisis.

Lockyer has also accused Reliant, Mirant and other power plant owners and marketers of violating state business practice laws.

Company Calls Suits 'Election-Year Ploy'

Reliant spokesman Richard Wheatley called the lawsuits baseless and "an election-year ploy that will discourage the development of new supplies of electricity."

Reliant and Mirant bought power plants in California at the invitation of state regulators trying to break up the electricity service monopolies of Southern California Edison and Pacific Gas & Electric. The utilities were forced to auction plants under California's ill-fated and largely defunct deregulation scheme.

Mirant's corporate predecessor, Southern Energy, bought three Bay Area power plants from PG&E for $801 million in 1999. Reliant bought five plants--in Daggett, Etiwanda, Goleta, South Oxnard and West Oxnard--from Edison for $277 million in 1998. According to Lockyer, Mirant controls roughly 44% of the Northern California power market, while Reliant controls 28% of the market in the south.

"We're damned if we do, damned if we don't," said Mirant spokesman Patrick Dorinson.

"The state wanted energy companies to invest in the state. We invested ... and our thanks for that is multiple lawsuits and accusations."

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