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California may sue over power

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WASHINGTON — With talks between the state and power generators stalled, California may go to court to help win the $8.9 billion state officials believe it was overcharged for electricity.

"I think we have demonstrated very clearly both to the FERC and to the judge that the state is owed $8.9 billion and will settle for nothing less," said Roger Salazar, a spokesman for Gov. Gray Davis.

With negotiations at an impasse, the administrative law judge for the Federal Energy Regulatory Commission said California is probably owed no more than $1 billion in refunds.

"The numbers were too far apart," said Curtis Wagner, the FERC chief administrative law judge.

California, Wagner said, may receive nothing at all because generators may be owed more than they have to return for any overcharges.

He placed the refunds owed the state at between $716 million and $1 billion. Power providers had offered $716 million as part of an overall settlement, while California state officials sought $8.9 billion, Wagner said.

He said California officials had not made the case for $8.9 billion in refunds.

Salazar, however, said the state would go to court and may ask for $20 billion.

Separately, Wagner split off claims of overcharges from the Pacific Northwest, saying he has not had time to consider those allegations under the short timetable ordered by FERC last month.

Wagner served as a mediator during the 15 days of negotiations and will recommend a settlement to FERC by next Monday. The commission ordered the talks last month in an effort to resolve differences between producers and the state over the breakdown of California's deregulated electricity market.

Consumer advocates assailed the judge's recommendation and urged the state to continue its attempt to get refunds from what they say are profiteering power companies.

"It's like catching a bank robber, but instead of making him give back all of it, you only make him give back 5 percent of what he stole," said Douglas Heller, spokesman for the Santa Monica-based Foundation for Taxpayer and Consumer Rights.

Power generators, however, were generally pleased with Wagner's comments.

Brent Bailey, general counsel for Duke Energy, said even if the formula Wagner recommends produces $1.5 billion in refunds, "that's a reasonable amount in the context of these settlement talks."