Reliant Energy Inc. said Monday that it would pay $460 million to resolve claims that it withheld power and overcharged for electricity during California's energy crisis in 2000 and 2001, becoming the last major out-of-state power producer to settle disputes from the troubled time.
The settlement, which would include limited refunds directly to California consumers, closes outstanding civil cases against the company brought by California, its utilities and private plaintiffs, as well as those brought by Washington state and Oregon. Reliant didn't admit wrongdoing.
"It's been a long time coming. But to have Reliant done is a huge step," said Gary Ackerman, executive director of the Western Power Trading Forum, which represents traders and power plant owners.
Gov. Arnold Schwarzenegger called the agreement "great news for California," adding that he would "continue to fight for justice from companies that took advantage of California residents and businesses during the energy crisis."
During the state's yearlong energy ordeal, which brought record prices and rolling blackouts, California officials accused several major power producers, including Reliant, of manipulating the electricity market through false plant shutdowns and trading schemes. Last year, a federal grand jury indicted a Reliant subsidiary and four of its managers in connection with an alleged scheme to turn off power plants to force up prices. That criminal case isn't affected by Monday's settlement.
At one point, California regulators and others claimed that ratepayers were owed as much as $9 billion because of alleged electricity overcharges.
California Atty. Gen. Bill Lockyer, who has led the state's fight for refunds, said the Reliant deal was important for ratepayers because "the dollar amount is one of the more significant claims ... and it's real money."
Two larger settlements, with Enron Corp. and Mirant Corp., are not likely to be collected in full because the companies are in Chapter 11 bankruptcy reorganization. The state has reached agreements worth more than $5 billion with 11 energy companies that sold electricity during the power crisis, including smaller settlements with El Paso Corp., Duke Energy Corp., Dynegy Inc. and Williams Cos.
Reliant Chief Executive Joel Staff said the Houston-based company agreed to the settlement to remove lingering uncertainty from litigation and regulatory proceedings.
