Edison and BPA reach $28MM Deal

By Published On: June 9, 2006

The Bonneville Power Administration will pay Southern California Edison $28.5 million to settle two lawsuits arising from disputes over power swaps during the 2000-01 energy crisis. The settlement is, however, contingent on all energy crisis refund disputes being put to rest, under a proposed deal announced June 7. “Our goal is to put this litigation behind us,” said BPA spokesperson Mike Hansen. While not admitting any wrongdoing, he added that the agency “recognizes that California is a good business partner.” Edison stated that the settlement “represents yet another step in resolving past issues and moving forward with the work of ensuring that utility customers will have adequate power supplies at affordable prices.” The dispute is based on the interpretation of a 20-year contract for up to 500 MW of power that the two parties signed in 1988. During the energy crisis, BPA read the contract as allowing power trades in place of energy sales. According to Hansen, the Northwest power agency would send 250 MW of hydropower to California during the day, with Edison allowed to call on another 250 MW. The agency expected 250 MW to be returned the same night during the summer months. Any additional power sent south by the federal agency was supposed to be returned over the grid later, according to BPA’s interpretation. Edison, on the other hand, did not read the contract as equating power exchanges with sales. The investor-owned utility sued BPA after the agency terminated the agreement. Edison filed suit in the Court of Federal Claims, alleging breach of contract, and sought $186 million in damages. It filed another suit after BPA cut off the deal, seeking $22 million for its wrongful-termination claim. BPA countered that it was owed $75 million for power sales made during 2000-01 to the California Power Exchange. According to Hansen, the $28.5 million BPA will pay to Edison will come out of the outstanding California refund claim settlements at the Federal Energy Regulatory Commission. The California Public Utilities Commission must also approve the agreement before it is final.

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