Pepco Customers May See Higher Electric Bills; Bankrupt Power Supplier Wants to Void Contracts
Byline: Marguerite Higgins, THE WASHINGTON TIMES
Mirant Corp.'s bankruptcy has fueled the chance of higher electricity bills in the Washington area.
The Atlanta energy company, which filed for Chapter 11 bankruptcy protection Monday night, supplies all the power for Pepco, the main electricity supplier in the Washington area with 700,000 customers.
Mirant sells power to the utility at below-market prices under a four-year agreement struck when Mirant bought the company's electricity plants for $2.65 billion in 2000, Pepco spokesman Bob Dobkin said.
Mirant may seek to void the contract after filing the largest U.S. Chapter 11 bankruptcy case this year, he said.
Mirant has asked for court permission to cancel "burdensome" or "unnecessary" agreements, including power and natural-gas sales contracts, according to court documents.
For now, Mirant continues to supply Pepco under the contract terms and prices and the lights will stay on, Mr. Dobkin said.
"If we had to replace that contract at spot prices, we couldn't withstand it," Pepco Chief Financial Officer Andrew Williams said at an investor conference in New York last month. "We'd have to go back to regulators" for rate increases.
Pepco's rates are regulated by the public service commissions in Maryland and the District.
The company said it plans to use legal action to keep the Mirant contract, but it has other power options.
Those options include signing contracts with power vendors like PPL Corp., Public Service Enterprise Group Inc. and Constellation Energy Group Inc., Mr. …