Aug 16 (Reuters) - One of the biggest remaining lawsuits stemming from California’s 2000-2001 energy crisis was resolved after a Canadian province-owned company agreed to a $750 million settlement over claims it manipulated electricity prices.
The company, BC Hydro subsidiary Powerex, will pay only $273 million to California utilities under the settlement, because it is owed $477 million for power sold during the crisis, British Columbia said in a statement on Friday.
California suffered severe blackouts and high energy prices during the year-long crisis which, exacerbated by a drought, hurt the state’s economy and helped replace a Democratic governor with Republican Arnold Schwarzenegger.
California has accused a number of companies, including the now-bankrupt Enron, of manipulating the state‘e electric market. Subsequent studies cited regulatory missteps and a lack of generation capacity as factors in the state’s energy crisis.
“According to testimony submitted by the Attorney General, Powerex engaged in market gaming by purchasing and exporting to Canada huge quantities of electricity California needed, and selling it back to California at exorbitant prices,” California State Attorney General Kamala Harris said in a statement.
The British Columbia statement said the settlement recognized that Powerex did not admit to any wrongdoing, and said the company has sold $3.5 billion-worth of electricity to California in the past 10 years.
“This was a tough but necessary decision to protect taxpayers,” British Columbia’s minister of energy and mines, Bill Bennett, said in the statement.
“We have learned that the U.S. court system can be unpredictable. When you weigh this settlement versus a potential $3.2 billion legal liability, we determined it was in the best interest of taxpayers to settle and put this long-standing dispute behind us,” he said.
California’s Public Utilities Commission said it had now garnered $4 billion in refunds from wholesale electricity sellers involved in the crisis.
“The refunds paid by Powerex will be passed through to consumers in California as an offset against their current electric bills,” it said.
Customers of three utilities will benefit; PG&E Corp , Edison International’s Southern California Edison and Sempra Energy’s San Diego Gas & Electric.
In all, 47 entities have settled over claims stemming from the crisis while 15 companies have not settled, British Columbia said.
This settlement requires approval from the U.S. Federal Energy Regulatory Commission.