Duke temporarily suspends California lawsuits

Duke Energy Corp. said it suspended a lawsuit against California Gov. Gray Davis after the state agreed to buy power from Duke that was formerly being provided under contracts with two financially troubled utilities. Duke said it will suspend until April 30 its lawsuit against Davis, who seized Duke's long-term energy contracts with Southern California Edison and Pacific Gas & Electric, after the now defunct California Power Exchange threatened to sell them to pay off the utilities' debts.

Feb. 27, 2001

2 min read

By the OGJ Online Staff

HOUSTON, Feb. 27�Duke Energy Corp. said it suspended a lawsuit against California Gov. Gray Davis after the Department of Water Resources (DWR) agreed to buy power from Duke that was formerly being provided under contracts with two financially troubled utilities.

Duke said it will suspend until April 30 its lawsuit against Davis, who seized Duke's long-term energy contracts with Southern California Edison Co. (SCE) and Pacific Gas & Electric Co. (PG&E), after the now defunct California Power Exchange threatened to sell them to help pay off the utilities' debts.

Under an interim settlement reported Monday, the DWR will buy electricity on behalf of residential and business customers that was previously being delivered to SCE and PG&E.

The interim agreement "gives California consumers the benefit of the long-term contract price that was negotiated with the utilities before they defaulted," said Bill Hall, head of Duke Energy's California operations. "And it allows Duke to provide electricity through an entity that can pay us for it. We hope that the interim settlement will give us enough time to develop a comprehensive long- term solution that works for everyone."

Duke said it also suspended for 30 days a separate lawsuit against the California Independent System Operator (ISO) as a result of a separate transaction between the company and the DWR. Duke and other power generators sued the ISO after it failed to pay for power purchased on behalf of SCE and PG&E and changed creditworthiness provisions of its tariffs.

When power generators tried to pull out of the market because they weren't getting paid, the ISO sued and a federal judge ordered the companies to keep selling to the ISO. The order was allowed to expire last week after the generators agreed to keep selling power to the ISO, while the Federal Energy Regulatory Commission hears the merits of the tariff case.