The San Diego Union-Tribune
One of the largest providers of electricity to California during the electricity crisis said yesterday it reached a tentative agreement to resolve a thicket of crisis-related legal disputes and rework its controversial long-term power contract with the state.
While not releasing specifics, Williams Cos. hailed the settlement as beneficial to all parties but noted that it must still be reduced to written form and presented to the Federal Energy Regulatory Commission for approval.
Representatives for Gov. Gray Davis and California Attorney General Bill Lockyer declined comment until a final settlement is reached. A consumer-group spokesman urged a public review of the tentative deal before further action.
“Too much has been done behind closed doors,” said Doug Heller of the Foundation for Taxpayer and Consumer Rights in Santa Monica. “Let’s take a look at the deal before (Davis) signs.”
An agreement with Williams would represent a breakthrough in FERC-sponsored settlement talks that began earlier this summer to resolve disputes over some $43 billion in long-term contracts signed by the state at the height of the crisis last year.
California officials say those agreements include illegally high prices and have asked for them to be terminated or have the costs reduced by $21 billion. For its part, Williams says it is owed $388 million by California for past power deliveries.
But Williams characterized the tentative settlement as going beyond reworking the long-term contract or payment issues and also covering the additional claims lodged against the company.
The Tulsa, Okla., company controls about 4,000 megawatts of electricity generating capacity — just under 10 percent of the state’s peak consumption — and has signed a 10-year deal to supply about 1,400 megawatts of electricity.
Williams faces allegations about its activities in California from the state attorney general, municipalities and from other states, as well as class-action consumer suits.
FERC also has threatened to pull Williams’ right to charge market-based power prices, as opposed to regulated rates, because of deficiencies in recent filings.
Michael Aguirre, a San Diego attorney who was the first to file a class-action suit on behalf of consumers against Williams and other power suppliers, declined to comment yesterday on whether his case was included in the settlement or on whether he participated in the settlement talks.
State officials have announced new agreements with a half-dozen suppliers in recent weeks. Heller, the consumer advocate, said that Williams was among about a half-dozen companies that he and others believe were prime forces in driving prices to dizzying heights during the crisis of 2000 and 2001.
Several companies have conceded manipulative trading practices first linked to Enron. Williams last year paid a fine to settle a complaint from FERC that it withheld electricity from California at a time of shortage. The company did not admit wrongdoing.
Curtis Wagner Jr., FERC’s chief administrative law judge, said the agreement with Williams was reached Thursday night. He expects a final written agreement to be presented for approval by Aug. 5, when the next round of settlement talks convenes in Washington, D.C.
Five power sellers, including Williams, have settled with the state in the past two weeks, he noted. He declined to disclose the four others. Nine suppliers still are negotiating. The state’s complaint named 22 companies.
In the meantime, a large Williams investor said approval of the deal could brighten prospects for the company.
“Any resolution of the legal claims in California and, more importantly, to the barriers set up for profitability are a big plus for Williams,” said Jake Dollarhide, chief operating officer at Fredric E. Russell Investment Management Co., which owns 192,000 shares of Williams and manages about $100 million.
Williams’ shares have plunged 97 percent in the past year, as the entire energy sector went into a tailspin following Enron‘s collapse and lower prices for commodities.
Yesterday, Williams shares rose 18 cents to $1.06. The company is the second-biggest owner of U.S. interstate natural-gas pipelines after El Paso Corp.
Williams still is trying to negotiate new secured lines of credit to replace a $2.2 billion unsecured credit line that expired this week.
Craig Rose: (619) 293-1814; [email protected]