Reliant Energy Inc. reached an agreement to pay $460 million to settle claims that it unfairly profited from the West Coast energy crisis in 2000 and 2001, company executives and state officials said yesterday.
The settlement will cover several claims brought by electric utilities, ratepayers and officials from three states - California, Oregon and Washington - and it will bring the total fines and settlements that Reliant has paid to $525 million.
Reliant, based in Houston, and other power companies including Enron Corp. have been accused of manipulating the West Coast electricity market by creating artificial power shortages to increase profits. Consumers in California, meanwhile, experienced soaring electricity rates and rolling blackouts.
Including yesterday's deal, California Attorney General Bill Lockyer, who has been leading the negotiations with energy companies, has reached 11 settlements totaling $5.29 billion with energy companies.
The Reliant settlement is subject to approval by the Federal Energy Regulatory Commission and the California Public Utility Commission.
"Along with Enron, Dynegy and El Paso Corp., they broke the rules and violated the law," Lockyer said in a statement. "This settlement holds Reliant accountable for its substantial role in the rip-off that was the energy crisis."
Without directly acknowledging or apologizing for any wrongdoing, Reliant said in a statement that it was "responsibly addressing legacy issues such as these."
"Today, Reliant is a very different company than it was in 2000 and 2001," the chief executive, Joel V. Staff, said, noting that Reliant had appointed new directors and senior executives since then.
California agencies and utilities will collect $453 million, and Washington and Oregon will take $7 million.
Lockyer's office said most of California's proceeds - $430.5 million - would eventually go to ratepayers through lower electricity rates. Lawyers' fees and costs are expected to total $15 million; plaintiffs in private class action lawsuits will receive $4.5 million; and municipalities and local water districts will get $3 million.
About $150 million of the settlement is to be paid in cash. The remainder is to consist of waivers of unpaid bills from Reliant to electric utilities that bought power from the company through the state's deregulated power grid.
The utilities include Pacific Gas and Electric ($230 million), Southern California Edison, a subsidiary of Edison International ($130 million) and San Diego Gas and Electric, a subsidiary of Sempra Energy ($42.1 million).
About $130 million of the payment will be used to lower power rates for customers of Southern California Edison beginning in January, Reliant said.
Though this settlement resolves the remaining civil claims against Reliant, the company still faces a trial in October on criminal charges brought by the Justice Department. Reliant agreed earlier to settle civil claims brought by the Federal Energy Regulatory Commission for $65 million.
Reliant shares rose 3 cents yesterday to close at $12.68. The company, which has 1.9 million electricity customers, primarily in Texas, said it would take a $350 million charge against earnings in the third quarter to account for the settlement.
Tom Dresslar, a spokesman for Lockyer, said the state was still pursuing cases against Powerex, a subsidiary of BC Hydro, and Sempra Energy.
In July, the state reached a $1.5 billion settlement with Enron, though the final payout is expected to be reduced in the energy company's bankruptcy. California's biggest settlement so far was with El Paso Corp., which agreed to pay $1.6 billion.