Jan. 10, 2003 — A $4.1 billion breach of contract brought by Pacific Gas and Electric Co. against the state of California has been dismissed.
The utility had claimed that the state owed it money lost when it was prevented from selling its power plants by a law enacted in 2001, when electricity prices were rising quickly, the Associated Press reported.
PG&E Co. claimed in the lawsuit that the 2001 law conflicted with the 1996 deregulation law that gave the utility permission to sell the energy its plants produced or the plants themselves at market rates.
But the Sacramento Superior Court judge said that the 1996 law was not a contract, and thus the lawsuit could not proceed.
Under the 2001 law, utilities in California were prevented from selling power plants until 2006.
The bill’s supporters said the utilities needed to retain the cheap source of power from their own plants to meet their customers’ needs. If they had sold their plants, or the energy from them, marketers could have marked up the price of the power and sold it back to the utilities at higher prices.