ATLANTA and WASHINGTON, Oct. 27, 2003 — Mirant and Pepco Holdings Inc. Monday announced that they have reached a settlement agreement to restructure two power purchase agreements under review for potential rejection as part of Mirant’s bankruptcy case.
The terms of settlement provide for additional value to Mirant in the form of higher energy prices, and will have no effect on rates paid by Pepco’s standard offer service customers in Maryland and the District of Columbia.
“This agreement is in the best interests of Pepco’s customers because it continues to ensure a reliable supply of electricity at no increase in prices to our standard offer service customers,” said Andrew W. Williams, chief financial officer, Pepco Holdings, Inc. “And it is beneficial to PHI shareholders because it removes uncertainty as to the price Pepco will pay for electricity supply, and it provides an opportunity to recover the value of the original contract through the bankruptcy proceeding.”
“We view the proposed agreement as a significant, positive step for Mirant as it works through its bankruptcy proceeding,” said Lisa D. Johnson, president, Mirant’s Mid-Atlantic operations. “The agreement provides additional value to Mirant over and above the existing power supply contracts with Pepco, while preserving the relationship with a key customer.”
Mirant and Pepco entered negotiations to restructure the power purchase agreements several weeks ago in an effort to avoid the possible rejection of the contracts through Mirant’s bankruptcy process.
Mirant supplies Pepco, a PHI subsidiary, with electricity for its standard offer service customers in Maryland and the District of Columbia. The agreement to supply Pepco’s Maryland obligations expires in June 2004. The agreement to supply Pepco’s D.C. customers expires in January 2005.
The new terms of the agreement are effective Oct. 1, 2003. The settlement is subject to court approval.