A BC Hydro subsidiary accused of manipulating energy prices during the California energy crisis more than 12 years ago will pay $273 million US in cash and offer the state electric utilities a credit worth $477 million in a settlement, the company announced this morning.
Powerex is one of 60 electricity trading companies accused of selling power to California at inflated prices during the summer of 2000 and 2001 when areas of the state experienced shortages that led to rolling blackouts and other emergencies.
The settlement announced Friday by B.C. Energy Minister Bill Bennett and Powerex CEO Teresa Conway relieves the company of a potential $3.2-billion liability from the ongoing actions of the U.S. Federal Energy Regulatory Commission against the electricity trading companies.
"This settlement provides long-term financial and legal certainty and removes the risk in fighting complex legal issues in U.S. courts," Conway said.
"The agreement recognizes that Powerex admits to no wrongdoing. This was a trade dispute. Powerex did nothing wrong."
Bennett said the province and the company were not happy with the settlement, but the risk to taxpayers in a long and costly legal fight was too high.
"This was an extremely difficult decision to come to, but a very necessary decision," he said. "The decision protects B.C. taxpayers from an unpredictable result in the U.S. court system, and allows Powerex to move forward with its positive commercial relationship with California."
Bennett said the settlement won't raise prices for B.C. ratepayers.
In February, both the Liberals and the NDP defended Powerex Corp. saying the company did nothing wrong in what it charged for its electricity exports to the United States.
OFriday, NDP energy critic John Horgan reacted to news of the settlement, saying the B.C. government has backed down on a case it could have won.
"We had an opportunity for appeal. It was only one decision. And now we find ourselves out $750 million in revenues and expenditures that can only come from one place, and that is ratepayers," Horgan said.
"For Mr. Bennett to suggest that this is somehow without impact is absolute lunacy. The cherry of indignation for me is that we are now paying to utilities in California for them to say we did nothing wrong."