Duke ( DUK) has checked another big-ticket item off its expense list. The giant energy company on Tuesday agreed to pay $208 million -- twice what it had expected -- to settle charges that it unfairly profited during the western energy crisis of 2000-01. The company inked the deal, triggering a $105 million pretax charge to second-quarter results, even though it has consistently maintained its innocence. Duke reiterated its stand on Tuesday. "As part of these proceedings, all participants in the western electric markets -- including Duke Energy -- have refund obligations, even though Duke Energy acted appropriately and within the market rules," the company stated in a prepared release. Duke President Fred Fowler went on to explain that the settlement offers "welcome closure" to protracted legal proceedings that have dragged on for years. Federal regulators have predicted that California by itself could receive up to $3.3 billion in refunds from energy companies that profited handsomely when power prices soared because of suspected manipulation by players such as Enron. At least one Duke insider was startled by his company's portion of the bill, however. "That's a big chunk of money -- a lot more than we initially thought we would have to pay," he said. "Cash is just flying out the door."
To be sure, other companies have already agreed to pay California far more, according to figures compiled by Power Markets Week. In mediation proceedings, which are separate from the big refund case, Williams ( WMB) inked a massive $1.4 billion global settlement with the state two years ago. El Paso ( EP) followed up with an even larger $1.7 billion deal in an effort to lessen its California exposure ahead of a heated proxy fight last summer. The deals resolved a number of legal challenges that both companies faced in the western U.S. Meanwhile, Duke is footing a high bill for refunds alone. The company has agreed to pay $85.1 million in cash -- and write off another $122 million in receivables and credits -- to settle allegations made by multiple parties investigating the western energy crisis.