Energy firm goes after state; Allegheny files $5 billion claim over electricity deals

Sacramento BEE ^ | February 27, 2003 | Dale Kasler

[Robert357]

An electricity supplier has filed a $5 billion claim against California, saying the state's efforts to break the company's power contracts harmed its finances and hurt its stock price.

The claim represents an escalation of a feud between the state and Allegheny Energy Inc., a troubled power conglomerate based in Maryland. The state sued Allegheny over the power contracts in January.

[Robert357]

The company's claim against California was made by its Allegheny Energy Supply Co. subsidiary. It was filed with the California Victim Compensation and Government Claims Board

This could make for some interesting footnotes in the billions of dollars of debt official statements that California will be floating soon.

[Robert357]

I didn't see anyone else post this and decided that a $5 Billion claim against the State of California was a significant story worthy of breaking news status and posting.

While I think this is a long shot for Allegheny, it could be reasonable enough to force the state into a settlement just to get it off of its official statements in bond issues.

[Centurion2000]

They should move to file liens on the Capital Building in Sacramento, all personal holdings (cars, property) of state employees and all state park lands.

If they don't the state will stiff them and fall behind the state legal system.

This could get really interesting.

[snopercod]

Thanks for posting this. I tried yesterday, but gave up.

I wish Allegheny luck, but as usual, they are a David up against Goliath. California has all the time and money in the world to fight this case, and Allegheny is on the verge of bankruptcy (Thanks to Davis and Friends).

[Ernest_at_the_Beach]

Thanks for the ping!

I have been away with Family medical problems.(my wife Kathy this time )

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[randita]

I'd think this would be a hard case for Allegheny to prove. Although the decline in Allegheny's stock value might have occurred concurrently with CA's effort to renege on the legal contracts, that alone wouldn't be proof that CA's underhanded tactics actually CAUSED Allegheny's problems.

This is probably a smokescreen by Allegheny to force CA to get off Allegheny's back and make a reasonable deal. It probably won't work.

[Robert357]

This is probably a smokescreen by Allegheny to force CA to get off Allegheny's back and make a reasonable deal. It probably won't work.

In one sence, it won't work in that Allegheny has a low probability of getting any money out of a court decision. On the otherhand, I can defintely see an out of court settlement, especially once CA finds out what disclosure language starts to creap into their official statements and what that does to bond buyers.