The $1.625 billion settlement provides California ratepayers with $1.45 billion in benefits, including $1.32 billion in monetary payments and a $125 million savings off the state’s long-term energy contract with El Paso. It must be approved by the Federal Energy Regulatory Commission (FERC) and the San Diego County Superior Board.

The settlement is the fifth, and largest, resulting from the investigation into the California energy crisis of 2000-2001. The five settlements have a combined value of $2.1 billion. They have provided more than $1.64 billion in relief to ratepayers.

Under the main terms of the settlement: · El Paso will provide $1.5 billion to ratepayers. Of that total, $600 million will be paid straight away, and $900 million over 15-20 years.

· $1.32 billion of the $1.5 billion will be used to reimburse California electricity and natural gas ratepayers. The California Public Utilities Commission (CPUC) will determine how most of the ratepayer reimbursement will be allocated.

· Of the $1.5 billion, El Paso will provide a combined total of $92 million to the states of Oregon, Washington and Nevada.

· El Paso’s two 50MWe long-term power agreements with the California Department of Water Resources will be reduced by $125 million to a total of $170 million.

· El Paso will be prevented from manipulating California gas markets in future.

· The agreement will assure Pacific Gas & Electric’s (PG&E) ability to call on specific reserve capacity from the El Paso system, as conditions require.

· El Paso will institute an anti-trust compliance and training programme.

· El Paso will fully cooperate with ongoing investigations of other companies and individuals suspected of manipulating the California energy market.

· El Paso will pay the state $2 million from a pool established by the company to provide bonuses to their executives.

Meanwhile, it has also been announced that a proposed settlement agreement has been reached by the CPUC and PG&E to end PG&E’s bankruptcy. The settlement’s agreements include the following: · PG&E will abandon its effort to divide the utility into four parts, with three of them under federal control. Instead, the utility will remain intact under CPUC regulation.

· The CPUC projects that rates will fall in 2004, by approximately $350 million per year. Rates are projected to fall by 0.5c from their current 13.87c/kWh in January 2004, and continue falling to about 12.8c/kWh by 2008.

· PG&E will dedicate 140,000 acres of watershed lands to maintain its hydroelectric operations and to be used in perpetuity for public purposes.

· A $15 million venture capital fund will be established to foster and promote renewable technologies.

· Creditors will be paid in full.

· The settlement will end the litigation and allow the parties to move ahead. It would allow PG&E to emerge from bankruptcy.