Mirant does not have to pay Pepco, judge rules

By Jeff Pines

Washington, Dec. 16 - Mirant Corp. will get to keep a lot more of its money thanks to a Wednesday ruling that the company does not have to pay Pepco as part of an asset sale agreement.

Judge Michael Lynn of the U.S. Bankruptcy Court for the Northern District of Texas denied a motion by Pepco to order the Atlanta-based power company to continue making its out-of-market payments under their agreement. The judge does plan to revisit the issue, according to Mirant.

The payments Pepco is demanding are part of the back-to-back agreement in the asset purchase and sale agreement under which Mirant bought Pepco's generating assets in December 2000. The district court found that the back-to-back agreement is part of a larger contract that cannot be rejected in part.

Had the judge ruled in favor of Pepco, the December payment would have been about $17 million. The contract runs until 2021, a Mirant spokesman said.

From July 2003 to October 2004, Mirant said it paid Washington-based Pepco about $370 million for power under the agreement - an amount it says is significantly higher than market rates.

On Dec. 15, Lynn also extended Mirant's exclusive period to file a reorganization plan to Jan. 31, 2005. The company's current period of exclusivity was set to expire Dec. 31.

Mirant filed for bankruptcy on July 14, 2003. Its Chapter 11 case number is 03-46590.

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