Court rules Calif. energy contract seizure illegal

SAN FRANCISCO, September 20, 2001 – A federal appeals court has ruled that the seizure of power contracts from two major California utilities was illegal.

The 9th Circuit Court of Appeals said California Gov. Gray Davis acted illegally when he seized the contracts from Southern California Edison and Pacific Gas & Electric Co. at the height of the state’s energy crisis in January, Reuters News Service said.

The contracts, worth over $200 million, were taken from the California Power Exchange (CPX). Duke Power sued the governor, saying the CPX should have been allowed to sell the contracts to help pay back the generators.

Pacific Gas & Electric Co. has filed for bankruptcy protection, and Southern California Edison is trying to avoid a similar fate. But the California legislature adjourned for the year without completing a bailout package for SoCal Edison, and some of its unsecured creditors have said they want to force a bankruptcy.

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