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These excerpts taken from the PCG 8-K filed Oct 28, 2005. Mirant SettlementIn January 2005, the Utility and other parties entered into a settlement agreement with Mirant Corporation and certain of its subsidiaries, or Mirant.
The first part of the two-part settlement is between Mirant and several California parties, including the California Attorney General’s Office, the California Department of Water Resources, or DWR, the CPUC, Southern California Edison, San Diego Gas & Electric Company, and the Utility, or the California Parties, resolving market manipulation claims, including Mirant’s liability for FERC refunds, penalties and civil liabilities arising out of the California energy crisis in 2000 to 2001. Under this portion of the agreement, Mirant will provide the California Parties approximately $320 million in cash equivalents and $175 million of allowed claims in Mirant’s bankruptcy proceeding. Of these amounts, the Utility will receive approximately $130 million in cash equivalents and $40 million in allowed claims. The final cash value of the allowed claims will not be known until the completion of Mirant’s bankruptcy proceeding.
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The second part of the settlement is between the Utility and Mirant and is designed to settle claims that Mirant overcharged the Utility under Mirant’s RMR contracts and other disputes. Under the settlement agreement, Mirant has agreed to transfer to the Utility the equipment, permits and contracts for the construction of Contra Costa Unit 8, a modern 530-megawatt power plant Mirant started to build, but never completed. The Utility plans to file an application with the CPUC to seek authorization to complete and operate Contra Costa Unit 8 under a cost-of-service ratemaking structure. If the Utility and Mirant do not complete the necessary transfer agreement or if the Utility does not receive the necessary approvals, including CPUC authorization, the Utility will be paid at least $70 million in lieu of transferring the assets. The settlement agreement also includes a contract that would give the Utility the right from 2006 through 2012 to dispatch power from certain RMR units owned by Mirant subsidiaries when the facilities are not needed by the ISO to meet local reliability needs. In addition, the Utility will receive approximately $60 million of allowed claims, credits, offsets, and/or cash from Mirant and Mirant will withdraw its outstanding claim in the Utility’s bankruptcy proceeding of approximately $20 million. The settlement may also include separate options under which the Utility, under certain circumstances, would have the right to acquire Mirant’s existing Contra Costa and Pittsburg power plants.
The settlement agreement became effective on April 15, 2005, after all regulatory and other approvals required by the settlement agreement were obtained.
Mirant Settlement
In January 2005, the Utility entered into a settlement agreement with Mirant Corporation and several of its subsidiaries, resolving overcharges and market manipulation claims from the sale of electricity by Mirant’s California operations.
The first part of the two-part settlement is between Mirant and several California parties, including the California Attorney General’s Office, the DWR, the CPUC, SCE, San Diego Gas & Electric Company, or the California Parties, and the Utility resolving market manipulation claims, including Mirant’s liability for FERC refunds, penalties and civil liabilities arising out of the California energy crisis in 2000 to 2001. Under this portion of the agreement, Mirant will provide the California Parties approximately $320 million in cash equivalents and $175 million of allowed bankruptcy claims. Of these amounts, the Utility will receive approximately $130 million in cash equivalents and $40 million in allowed claims. The final cash value of the allowed claims will not be known until the completion of Mirant’s bankruptcy proceeding. The Utility’s net after-tax refund amount will benefit its customers through adjustment of future revenue requirements.
The second part of the settlement is between the Utility and Mirant and is designed to settle claims that Mirant overcharged the Utility under Mirant’s RMR contracts and other disputes. Under the settlement agreement, Mirant has agreed to transfer to the Utility the equipment, permits and contracts for the construction of Contra Costa Unit 8, a modern 530-megawatt power plant Mirant started to build, but never completed. The Utility plans to file an application with the CPUC to seek authorization to complete and operate Contra Costa Unit 8 under a cost-of-service ratemaking structure. If the Utility and Mirant do not complete the necessary transfer agreement or if the Utility does not receive the necessary approvals, including CPUC authorization, the Utility will be paid at least $70 million in lieu of transferring the assets. The settlement agreement also includes a contract that would give the Utility the right from 2006 through 2012 to dispatch power from certain RMR units owned by Mirant subsidiaries when the facilities are not needed by the ISO to meet local reliability needs. In addition, the Utility will receive approximately $60 million of allowed claims, credits, offsets, and/or cash from Mirant Corporation or its subsidiaries and Mirant will withdraw its outstanding claim in the Utility’s bankruptcy proceeding of approximately $20 million. The settlement may also include separate options under which the Utility, under certain circumstances, would have the right to acquire Mirant’s existing Contra Costa and Pittsburg power plants.
The settlement agreement is not effective until it is approved by the FERC, the bankruptcy court overseeing Mirant’s bankruptcy proceedings and, to the extent deemed necessary by the Utility, the bankruptcy court that retains jurisdiction over the Utility’s Chapter 11 case. PG&E Corporation and the Utility are unable to predict whether and when the settlement agreement will be approved.
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