Officials in California have filed for permission to cancel $40 billion worth of power contracts in an effort to reduce the state's high energy prices. The officials, from the Public Utilities Commission (PUC) have appealed to the Federal Energy Regulatory Commission, claiming that thE companies whose contracts they seek to cancel are charging exorbitant prices for power.
Chief targets for the PUC have been companies which are based outside California. So far Dynegy, based in Houston and Williams, an Oklahoma company have been targets; now California company Calpine has been added to this list.
The contracts in question were signed when prices in California were behaving erratically, climbing as high as $300/MWh. The state called for companies to sign long term contracts in an effort to stabilise prices and Calpine was one of the first companies to do so. The average price obtained in these contracts was $88/MWh. However the spot market has fallen by one third since that time and the PUC believes that the long term contract prices are too high and that the companies took advantage of a difficult situation.
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