AG Sues Mirant Again

Under a law enacted this year, California attorney general Bill Lockyer filed another lawsuit against Mirant, this time in San Francisco Superior Court. The second lawsuit under the 2004 statute charges Mirant, which owns a power plant in San Francisco, as well as others in the Bay Area, with unfair competition and fraudulent business practices for allegedly engaging in market manipulation during the energy crisis. The first lawsuit under Government Code Section 12647 was filed against Enron in June. The statute gives the attorney general enforcement authority under the state?s commodity law as of January 1, 2004. The attorney general accuses Mirant of tens of thousands of fraudulent trades from 1998 to 2001. Those included ?Death Star??scheduling circular counterflow to receive a relief payment?and ?Get Shorty??where the California Independent System Operator buys back ancillary services. Also added are charges of engaging in ?Fat Boy? transactions, withholding power from the day-ahead and hour-ahead markets by scheduling power against fictitious load, creating a false impression of scarcity used to increase prices, among others. AG spokesperson Tom Dresslar said that ?in the best of all worlds, a judgment in state court would likely be in the hundreds of millions of dollars.? ?Really, this is just a placeholder,? countered Steve Huhman, Mirant director of regulatory affairs, Western region. ?The AG couldn?t win under the previous statute.? In a statement, Mirant added that because the company is under bankruptcy protection, the state?s case violates the automatic stay imposed by the bankruptcy code against seeking monetary damages. Last month, the attorney general was rebuffed by the Ninth Circuit Court of Appeals in a case alleging double-selling by several companies, including Mirant. The state was attempting to get its case heard in state court, but the Ninth Circuit said the issue belongs at the Federal Energy Regulatory Commission ( Circuit , July 9, 2004). Mirant agrees with the federal court that claims such as the attorney general?s belong at FERC. Currently, settlement talks involving such issues are ongoing, according to Huhman. The company is expecting a global settlement but wouldn?t estimate when a pact might be executed. A case management conference on the suit is scheduled for January 21, 2005. (No. 04433922)

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AG Sues Mirant Again

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