Bob,
MIR has already admitted that and called it as happening 1 day out of the 153 days in question. I don't think it is a problem. DUKE boarhogged California but just settled all claims today by agreeing to sell power this summer.
Sierra Pacific to Buy Power From Duke, Ends Complaint (Update4)
By Daniel Taub
Reno, Nevada, June 10 (Bloomberg) -- Duke Energy Corp. agreed to supply electricity and natural gas to Sierra Pacific Resources for the next three months, and Sierra Pacific will drop complaints with U.S. regulators that Duke overcharged for power last year.
Terms weren't disclosed. The three months cover the peak- demand period for power use, the companies said in a statement. Shares of Sierra Pacific, owner of Nevada's two largest electric companies, rose 8.9 percent.
Sierra Pacific said last month it may be forced to file for bankruptcy protection after Nevada regulators barred one of its utilities from collecting $437 million in power costs accrued during last year's energy crisis in the western U.S. The company filed suit to collect those costs and has been negotiating with suppliers, including Duke, to continue receiving electricity.
``Sierra Pacific has the customers and Duke has the supply,'' said Mark Maloney, who helps manage $1 billion in the John Hancock Patriot Funds, including 1 million Sierra Pacific shares. ``It works to both companies' best interest to renegotiate.''
Shares of Sierra Pacific gained 65 cents to $7.95. They have almost halved this year. Charlotte-based Duke, the second-biggest U.S. utility owner, dropped 91 cents, or 3 percent, to $29.09.
Sierra Pacific had complained to the U.S. Federal Energy Regulatory Commission that Duke charged too much for power in contracts signed last year, when the Reno, Nevada-based company was forced to buy wholesale electricity at prices higher than it could charge customers.
Deferred Payments
Under today's agreement, Duke will supply gas and as much as 1,000 megawatts of electricity an hour -- enough to light 1 million homes -- to Sierra Pacific from June 15 to Sept. 15.
Duke also agreed to accept deferred payments for a portion of the summer power costs under its existing contracts with Sierra Pacific's Nevada Power Co., the state's largest electric utility. The deferred-payment plan was proposed to all of Nevada Power's electricity suppliers in April to help the utility deal with liquidity problems, Sierra Pacific said.
Enron Corp., Reliant Energy Inc. and Morgan Stanley Dean Witter & Co. have all canceled power-supply agreements with Sierra Pacific, leaving the company with low electricity supplies for this year's peak-demand months, said Walter Higgins, chief executive officer of Sierra Pacific.
With those agreements being replaced with the Duke contract, ``we now have the power we think we ought to have on a planning basis to meet the average day in southern Nevada through the summer,'' Higgins said in an interview. ``Then, we either buy or sell based on hotter- or colder-than-normal weather.''
`Financially Weakened'
The Duke agreement will also help Sierra Pacific avoid bankruptcy, Higgins said.
Still, ``until we get through the summer and we've supplied our customers the power they want, and met the cash needs to do that, I am going to continue to worry,'' Higgins said. ``We are a financially weakened company.''
Last week, the Public Utilities Commission Of Nevada voted 3-0 to allow Nevada Power to sell $300 million in bonds. The utility will use the money raised to pay debt coming due in the next 18 months and cover capital expenses.
Maloney said the bond sale and the agreement with Duke likely will give other power suppliers the confidence to negotiate settlements with Sierra Pacific.
``A lot of the companies were waiting to see how the PUC voted,'' he said. ``Duke may have been the first to sign on board, but I'm sure there will be others to work with the company.''
More Complaints
In addition to Duke, Sierra Pacific has filed complaints with the FERC against units of Morgan Stanley, Reliant, Enron, Calpine Corp., El Paso Corp., BP Plc, Mirant Corp., American Electric Power Co. and Allegheny Energy Inc.
The contracts with Sierra Pacific were signed after power prices soared in the U.S. West amid turmoil in California's newly deregulated electricity market. State officials have accused Enron, which filed for bankruptcy in December, and other power providers of manipulating the market to increase their profits.
Generators and traders have denied the charges, saying prices rose because of a shortage of hydroelectric power resulting from a drought and an increase in electricity demand. California's two largest electric utilities, units of PG&E Corp. and Edison International, became insolvent last year buying power for more than state law allowed them to charge customers.
Duke and other power suppliers have said their contracts with Sierra Pacific were entered into with the full agreement of both parties, and should be honored by the utility company. |
