- The Washington Times - Tuesday, November 12, 2002

SACRAMENTO, Calif. (AP) California reached its first settlement yesterday with an energy producer it accused of overcharging the state last year, trimming up to $1.4 billion from its contract with an Oklahoma energy firm and reaping about $400 million more in refunds.

The deal between California and Tulsa, Okla.-based Williams Cos., however, does not immediately translate into lower monthly bills for ratepayers or ease the state's budget deficit. And it affects only about 10 percent of the $43 billion in long-term energy contracts the state reached last year with energy producers during the state's energy crisis.

Williams acknowledged no wrongdoing as part of the agreement, which California Gov. Gray Davis called "a victory for ratepayers."

"The new contract provides us more reliable power when we need it at much more favorable terms," Mr. Davis said.

Yesterday's agreement followed months of negotiations after the parties agreed in principle to renegotiate the state's 10-year energy contract and settle several lawsuits.

The states of Oregon and Washington, which joined class-action suits against Williams, will also receive $15 million each over three years. The three states started a coordinated investigation into energy companies amid accusations of price manipulation during the 2000-2001 West Coast energy crisis.

Aides to California Attorney General Bill Lockyer said they are in similar talks with other energy companies and that more settlements are possible.

In Tulsa, Williams President and Chief Executive Officer Steve Malcolm said the agreement clears the firm to sell its contracts in California and removes potential investor uncertainty.

Mr. Malcolm said his conversations with banks, lenders and shareholders told him the lawsuits and investigations were holding the company back.

"That's why we felt it was critical to get this done," he said.

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