Pepco says judge denies request by Mirant Corp.

December 27, 2003|By BLOOMBERG NEWS

WASHINGTON - Pepco Holdings Inc., owner of Washington's electric utility, said yesterday that a federal judge denied a request from bankrupt Mirant Corp. to reject two power-purchase agreements.

The agreements stemmed from Mirant's purchase of power plants and some power-supply contracts from Pepco in June 2000 for $2.65 billion. Under the arrangement, Mirant reimburses Pepco for the cost of buying power from third-party generators.

The ruling came from Judge John McBryde of the U.S. District Court for the Northern District of Texas, Fort Worth Division.

The reimbursed electricity purchases are at fixed prices above current levels and are "draining tens of millions of dollars per month" from Mirant, the Atlanta-based company said in a filing in U.S. Bankruptcy Court.

Pepco, along with the Federal Energy Regulatory Commission, opposed Mirant's attempt to use bankruptcy law to terminate the contracts, saying that Mirant required FERC approval.

In October, Pepco agreed to pay Mirant more money in a related contract dispute involving below-market power sold to Pepco.

Representatives from Pepco and Mirant were not immediately available for comment.

Mirant shares fell 5 cents to 40 cents yesterday in over-the-counter trading. Shares of Pepco gained 28 cents to $19.10 on the New York Stock Exchange.

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