California announced on Sunday plans to petition the Federal Energy Regulatory Commission (FERC) to void some long-term power contracts the state signed last year. California estimated overpaying about US$21 billion on some 32 contracts valued at some US$43 billion.

The California Public Utilities Commission said it filed petitions under a section of the Federal Power Act charging that contracts the state has with 22 sellers are at prices and terms that are ``unjust and unreasonable,'' said Gary Cohen, general counsel for the agency.

The PUC is asking FERC to void the 32 problematic contracts so that ``we can be back in the position we would be in if FERC had acted in the winter of 2000'' to ensure market stability, he explained.

``In January of 2001, power generators threatened to stop delivering power to Californians. The lights were going to go off ... FERC was no where to be found,'' said Barry Goode, California's Legal Affairs Secretary.

The contracts allowed California to purchase power at prices well below the spot-market prices of $300 per megawatt-hour or more. Currently, the average price of the contracts -- $88 per megawatt-hour -- is roughly three times more expensive than the spot market. Goode alluded to evidence of market manipulation as a factor in the decision to petition FERC to review the contracts.

Earlier this month, FERC Chairman Patrick Wood told a congressional committee that his agency would investigate whether bankrupt energy trader Enron Corp. and other companies manipulated California's power market and inappropriately influenced the prices of long-term power contracts.

``We are not alleging that the contracts were improper or imprudent, nor are we accusing every seller of improper behavior,'' said Erik Saltmarsh, chief counsel of California's Electricity Oversight Board. ``The market was so distorted it wasn't possible to get a deal on terms that could be obtained in a functioning market.''

Calpine Corp. (San Jose, California, US) said in a statement that it has anticipated this filing for some time and is confident that the FERC will find the company's long-term contracts with the California Department of Water Resources (DWR) just and reasonable. The company said FERC is the appropriate forum to ensure an orderly resolution of any questions regarding the state's power markets. The company and the state continue to perform under Calpine's contracts to provide electricity to the state.

``Our contracts are the state's lowest priced agreements and helped drive down energy prices in California during an extremely volatile period. We expect these filings will set in motion an orderly, fact-based process, demonstrating that the terms of our power contracts are just and reasonable,'' said James Macias, Calpine's senior vice president and lead negotiator for the contracts.

Calpine is providing to DWR up to 2,000 megawatts of energy from its fleet of new and existing energy centers under the terms of two 10-year fixed priced contracts. Calpine will also supply up to 735 megawatts of peaking capacity from 15 new peaking turbines through two separate agreements.