Faced with a potential liability of $3.2 billion, a Canadian power company agreed to pay California $750 million to settle claims that it helped rip off the state during the deregulation-fueled energy crisis in 2001-02.
British Columbia’s Powerex, Inc. admitted no wrong-doing but joined 40+ companies who have paid in excess of $4 billion to compensate California for the market manipulations that caused rolling blackouts, nearly bankrupted the state and cost utility ratepayers dearly. It is the largest settlement reached to date.
The deal still awaits approval by the Federal Energy Regulatory Commission (FERC). Powerex would pay the state $273 million and offer $477 million in credits to California electric utilities. Powerex is a subsidiary of British Columbia Hydroelectric, which is owned by the government.
The California Public Utilities Commission (CPUC) said the money will go to customers of California’s three major investor-owned utilities: Pacific Gas and Electric Company, San Diego Gas & Electric, and Southern California Edison.
The state alleged that Powerex gamed the California market by buying large amounts of power, exporting it to Canada and then selling it back to a desperate California at much higher prices.
British Columbia Minister of Energy Bill Bennett was adamant that Powerex had done nothing illegal, but told the Vancouver Sun the uncertainties of the California legal system and the prospect of a drawn-out court battle compelled a payout now.
It looked for years like the 60+ companies accused of plundering the state during the energy crisis would escape legal responsibility when FERC refused to hear California’s appeals for help. But a federal court said FERC was wrong in 2006 and the process for reviewing claims began.