The Williams Companies and Williams Energy Marketing and Trading Company have reached a settlement that, in part, will pay $4.8 million to nine San Diego water districts. The settlement is the result of multiple lawsuits filed against the energy company by the water districts, the State and many other entities throughout California.
Under the terms of the settlement, Williams will make cash payments to the state for the benefit of many entities including the nine local water districts. The settlement also amends its contracts with the State of California, which will result in substantial savings to the state estimated to be in excess of $1 billion.
In 2001, Sweetwater Authority, Valley Center Municipal Water District and Padre Dam Municipal Water District filed a lawsuit against 13 energy producers, including Williams Energy, seeking injunctive relief and damages for unjust and unreasonable electricity prices. The suit was later amended to include Ramona Municipal Water District, Helix Water District, Vista Irrigation District, Yuima Municipal Water District, Fallbrook Public Utility District and Borrego Water District.
The lawsuit claimed that the power producers had engaged in unlawful, unfair and anti-competitive acts and practices including withholding power for the purpose of creating an artificial shortage of electricity, which resulted in unjust and unreasonable prices for power.
Under the terms of the settlement, the $4.8 million that the San Diego area districts will receive will be used to enhance the public power supply through construction of energy efficient projects and reduction of pollution associated with the consumption of energy. The districts will receive the funds in three annual payments that will be deposited to an account administered by their attorneys, Best Best & Krieger LLP. The first payment of $2.1 million is expected to be made later this month.
"We're delighted with the settlement," stated C. Michael Cowett, a partner with Best Best & Krieger LLP, who represents the districts and participated in the settlement's development. "We are hopeful that this settlement will lead to additional settlements with the 12 other defendants."
Williams is the first power producer to reach such a settlement. The California State Attorney General negotiated the settlement together with the attorneys for the plaintiffs involved in the multiple lawsuits.
In addition, the settlement provides for Williams to provide two peaker plants to the San Diego region. Peaker plants are so named because they are designed to provide power during peak periods of electricity use. It is anticipated that these plants will be contributed to a local public agency in San Diego County who will install and maintain them.
Locally, it is estimated that the total damages to the nine water districts resulting from the 13 water producers' actions was $10 million. The districts believe they are entitled to treble damages and attorneys fees bringing their total claim to more than $30 million.
Source: Best Best & Krieger