Duke Settles for $207 Million

Duke Energy agreed to a $207.5 million settlement July 13 regarding alleged manipulation of state electricity markets. The agreement marks the second big settlement announced this month, following the announcement last week of a Williams deal amounting to $137 million ( Circuit , July 9, 2004). While regulators lauded the pact?amid hopes of investor-owned utilities that the deal will lead to more settlements?Duke said it wants to get on with business by eliminating ongoing litigation. The settlement wraps up all of the company?s Federal Energy Regulatory Commission refund proceedings; investigations by attorneys general in California, Washington, Oregon, Idaho, and Utah; and natural gas issues for California utilities. Of the total, Duke said it will pass on $122.4 million owed to the company by the California Independent System Operator and the California Power Exchange. Duke will pay another $85 million in cash. If the deal is approved by the California Public Utilities Commission and FERC, the state Department of Water Resources will get $16.6 million to reduce rates or pay off bond obligations in addition to $8 million in repayments for funds spent on out-of-state power that the department imported during the energy crisis. The settlement amount covers resolution of improper market activity?including that alleged to have occurred before October 2000. This could set a precedent for the state, since federal regulators have refused to consider that time frame as part of FERC?s refund proceeding. According to the state Attorney General?s Office, two-thirds of the money owed consumers from alleged energy crisis price-gouging derived from events that took place during the pre-October period. Standard & Poor?s weighed in this week on the settlement, calling it a ?favorable event because the agreement significantly eliminates legal and regulatory uncertainty for the company as it attempts to reduce business risk and to carry on selling electricity in California without any limitation.?

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Duke Settles for $207 Million

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