POSDEF Power Company, L.P. (POSDEF) announced that it has today suspended and terminated its power purchase agreement with Pacific Gas & Electric Company (PG&E). POSDEF is a Qualified Facility that provides PG&E with approximately 45 megawatts of electricity. POSDEF has been a reliable provider of electricity to California for over a decade.

POSDEF has maintained sales of electricity directly to PG&E pursuant to a long-term power purchase contract at rates that have recently been a fraction of the cost of out-of-state generated power, rather than selling its power to the open market.

"PG&E's failure to honor its contractual obligations may cause serious financial injury to POSDEF and other Qualified Facilities under long term contracts. The ripple effect of PG&E's financial situation could be catastrophic unless the state provides credit enhancements to protect valuable supply contracts," said Kenneth Klee, a partner with Klee, Tuchin, Bogdanoff & Stern in Los Angeles, who serves as counsel to POSDEF.

POSDEF remains committed to selling electricity to the California market provided it receives assurances that it will be paid by the Department of Water Resources or another creditworthy entity.

SOURCE: POSDEF Power Company, L.P.