California DRW takes over Mirant power contracts

Mirant Corp. said it reached an agreement to shift 1,000 Mw in power contracts from the California Power Exchange (PX) to the state's Department of Water Resources which is acting as the state's electricity buyer. The contracts vary in term length from 1-10 months. Calif. Gov. Gray Davis seized the long-term power contracts, after the PX threatened to sell them to pay off the unpaid bills of Southern California Edison and Pacific Gas & Electric.


By the OGJ Online Staff

HOUSTON, Feb. 28�Mirant Corp. said it reached an agreement to shift 1,000 Mw in power contracts from the California Power Exchange (PX) to the state's Department of Water Resources (DWR), which is acting as the state's electricity buyer.

The contracts vary in term length from 1-10 months. Calif. Gov. Gray Davis seized the long-term power contracts which were purchased by the state's two near-bankrupt utilities Pacific Gas & Electric Co. and Southern California Edison Co., after the California PX threatened to sell them to pay off the utilities' unpaid bills.

On Monday, Duke Energy Corp., whose contracts had also been seized, agreed to a similar switch and temporarily suspended a lawsuit against Davis, while negotiations are under way.

"In our continuing effort to cooperate with the state of California, the California DWR has been named as the third-party holder of these contracts,'' said Randy Harrison, chief executive officer of Mirant's western US operations. "This places the contracts directly in the hands of a creditworthy entity.''

Mirant, formerly Southern Energy Co., which operates California power plants in San Francisco, Antioch, and Pittsburg, last week agreed to sell 750 Mw of electric generation capacity to DWR during March. The DWR is currently acting as the electricity buyer for the state.

"We became more confident in our ability to enter such a contract after we received full payment from the CDWR for a bill due Feb. 20,'' Randy Harrison said. Additional terms of the contract were not disclosed.

DWR has taken a key role in buying power for California as the near bankruptcy of its two largest utilities PG&E Corp unit Pacific Gas & Electric and Edison International unit Southern California Edison has made sellers reluctant to sell to them.

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