California Governor Arnold Schwarzenegger on Monday announced that state negotiators have finalized a major settlement with Dynegy Inc. valued at $281.5 million, which includes more than $256 million for electricity customers of California’s three investor-owned utilities.
The settlement resolves claims against the company in the Federal Energy Regulatory Commission’s Refund Proceedings in which energy suppliers have been accused of overcharging California consumers for electricity between Jan. 1, 2000 and June 20, 2001.
“This is a major victory for California ratepayers,” said Schwarzenegger. “This is just the beginning. I am committed to pursuing further settlements with those that gamed the market and unfairly profited from hard-working California residents and businesses.
“I would like to congratulate our team of negotiators for their work on behalf of ratepayers,” Schwarzenegger continued. “I will not waver in my commitment to decrease overall electricity costs in California and ensure an adequate energy supply so that our businesses and residents can prosper.”
Besides the monetary relief for investor-owned utility customers totaling $256.4 million, the settlement includes $13.3 million for other energy market participants owed refunds by Dynegy and $3 million to resolve pending market manipulation claims against Dynegy.
Of the $256.4 million, the California Department of Water Resources, which purchased power for California’s three-investor utilities during a portion of the refund period claim, will receive $123 million. That money will ultimately be used to either help decrease electricity rates or retire bonds that were issued to absorb inflated energy costs.
Another $137 million will be allocated to the state’s three investor owned utilities, including $82.3 million to Pacific Gas and Electric, $38.2 million for Southern California Edison and $16.5 to San Diego Gas and Electric.
Dynegy also has agreed to pay DWR nearly $3.6 million for overcharging the Department for its “out-of-market” transactions with the company. DWR’s reimbursement for such overcharges had been denied by FERC, which insisted that DWR was not entitled to such claims.
California parties have been working through FERC proceedings to recover excess costs for electricity for ratepayers since 2001. These parties include the California Attorney General’s office, California Public Utilities Commission, California Electricity Oversight Board, the California Department of Water Resources, and the three investor-owned utilities.
The state will continue to seek relief for California ratepayers from energy companies who have reportedly manipulated California’s energy markets.
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