Reliant Energy Inc., owner of five power plants in California, agreed to pay $460 million to settle claims it manipulated electricity prices and gouged consumers during the state's energy crisis in 2000 and 2001.
Reliant will pay $453 million to California and three utilities plus $7 million to settle claims by Washington and Oregon, California Attorney General Bill Lockyer said in a statement yesterday. About $130 million of the payment will be used to lower power rates for customers of Southern California Edison beginning in January, the utility said in a statement.
The settlement resolves claims that Reliant withheld power to profit from higher electricity and natural gas prices while rates were surging tenfold and consumers endured blackouts. Reliant still faces U.S. criminal charges of shutting down power plants and submitting false bids to benefit from the crisis. The company has denied the allegations.
Reliant "ran roughshod over California consumers, taxpayers and businesses," Lockyer said in his statement. "This settlement holds Reliant accountable for its substantial role in the rip-off that was the energy crisis."
Reliant, along with Duke Energy Corp., Dynegy Inc., Mirant Corp., and Williams Cos., sold electricity from plants that California required its utilities to divest under a state law aimed at promoting competition in the power business. The five, along with El Paso Corp. and Enron Corp., have agreed to $5.15 billion in state settlements in the past 21/2 years.
Houston-based Reliant did not admit wrongdoing in the matter. "Reliant has taken a critical step forward in resolving a number of issues arising from the California energy crisis," chairman and chief executive Joel V. Staff said in a statement.
The settlement, which must be approved by federal and state regulators, resolves claims by California, Washington and Oregon, PG&E Corp.'s Pacific Gas and Electric Co., Edison International's Southern California Edison and Sempra Energy's San Diego Gas & Electric. The Federal Energy Regulatory Commission helped negotiate the accord.
California still has energy-related claims or lawsuits pending against Dynegy Inc. and B.C. Hydro's Powerex Corp. In July, California reached a $1.52 billion settlement with Enron over similar market-manipulation claims.