Reliant Energy Inc. on Monday agreed to pay $445 million to settle lawsuits filed by investor-owned utilities that claimed the company attempted to pump up trade volumes and revenues in the midst of an energy crisis in Western states.
The settlements with San Diego Gas & Electric, Edison International, Pacific Gas & Electric Co., and other entities calls for Reliant to pay $150 million in cash. Reliant will also waive claims to its receivables for power deliveries from Jan. 1, 2000, to June 21, 2001.
Reliant, which provides electricity to retail and wholesale customers, said the settlements are still subject to approval by a federal court in Texas and regulators. The agreement comes just weeks after Reliant agreed to settle all shareholder class-action lawsuits for about $68 million.
“This settlement is great news for California,” Gov. Arnold Schwarzenegger said in a prepared statement. “The people of California deserve affordable and reliable energy supplies. I will continue to fight for justice from companies that took advantage of California residents and businesses during the energy crisis.”
The agreement also ends investigations conducted by attorneys general in California, Washington and Oregon. All civil litigation filed by the California Attorney General’s Office, including a pending antitrust lawsuit, also were resolved.
Southern California Edison said in a statement it will likely receive more than $130 million under the latest settlement. San Diego Gas & Electric said it expects to receive about $42.1 million, while Pacific Gas & Electric expects about $230 million.
Reliant said all private electricity-related class action lawsuits filed on behalf of ratepayers in California, Washington, Oregon, Idaho and Utah were also resolved under the agreement.
“Part of moving forward is responsibly addressing legacy issues such as these,” said Reliant Chairman and CEO Joel Staff in a statement. “Today, Reliant is a very different company than it was in 2000 and 2001.”
Reliant will record an estimated $350 million pretax charge in the third quarter of 2005 to reflect the agreement. It did not admit to any liability by the company or its directors and officers, and there were no findings of any violations of securities laws.
The Houston-based company was accused of failing to disclose certain trading activities from 1999 to 2001 that took advantage of a power shortage in the West to pump up revenues. An energy shortage, mostly centered in California, caused rolling blackouts and skyrocketing electricity rates.