Powerex, BC Hydro’s wholesale energy trading subsidiary, has settled a long-running dispute with Californian utilities regarding claims that Powerex sold power at inflated prices during the 2000-2001 California energy crisis. Including Powerex, 60 electricity trading companies were active in the California power market during the crisis. To date, 47 energy sellers have settled separately with the Californian utilities.
The out-of-court settlement provides that Powerex will pay US$750 million to resolve the dispute: a US$273 million payment to the Californian utilities by Powerex, and a credit of US$477 million for monies owed by the Californian utilities to Powerex for unpaid power bills stemming back to the energy crisis. According to the BC government, Powerex is expected to incur a net loss of about C$101 million in fiscal 2014 a result of the settlement. The settlement remains subject to approval by the US Federal Energy Regulatory Commission.
Powerex and the BC government state that settling the dispute protects British Columbians from a potential $3.2 billion legal liability, allows Powerex to avoid future legal costs estimated at $50 million, and averts another $125 million per year in interest costs on the amount claimed by the Californian utilities.
Reportedly, the BC government and Powerex are not happy with the settlement, but determined that it was a necessary outcome given the amount in dispute and the unpredictability of the US court system.