CALIFORNIA'S largest utility sues state seeking millions in power contracts seized by governor
Wednesday, July 18th 2001, 12:00 am
By: News On 6
SAN FRANCISCO (AP) _ California's largest utility has sued the state seeking reimbursement of millions of dollars in energy contracts seized by the governor.
San Francisco-based Pacific Gas & Electric Co. ``has received no compensation for the damage to its property,'' the company said in a lawsuit filed Tuesday in San Francisco Superior Court.
PG&E filed for bankruptcy protection in April and is struggling to repay $14.4 billion to thousands of creditors.
Gov. Gray Davis seized the energy contracts on Jan. 31 to keep the California Power Exchange from liquidating them. The now-defunct exchange, which had been the state's middleman for buying and selling power, wanted the contracts to recoup hundreds of millions of dollars that PG&E owed it.
The governor's office acknowledged that California owes PG&E for the contracts, an amount that Davis wants a judge to determine. At the time they were seized, the state estimated their value at $160 million, while the power exchange priced them at $347 million.
``We seized the contracts to have reasonable priced power and expected that price to be set in a neutral forum,'' said Steve Maviglio, the governor's spokesman.
Under the contracts, the state buys electricity at a set price rather than paying higher prices for power bought at the last minute. Therefore, the contracts' value changes with the volatile price of electricity.
``We believe the state has benefited from the value of our contracts, and as a result we should be compensated,'' PG&E spokesman Ron Low said.
Low declined to place a value on the contracts.