<p>Pepco, a major utility serving the District of Columbia and its Maryland suburbs, has agreed to pay energy supplier Mirant Corp. more for power and hopes to recoup the extra cost through the Atlanta companys bankruptcy case.</p><p>In documents filed Monday with the Securities and Exchange Commission, Pepco said the agreement will result in an increase in the average price it pays Mirant from 3.4 cents per kilowatt hour to 4 cents per kilowatt hour.</p><p>The deal, which expires in June 2004 for Maryland and January 2005 for D.C., will cost Pepco an extra $60 million for energy. The company also said it faces an additional $45 million cost under a complicated agreement in which it must share profits with customers from the sale of some of its power plants to Mirant.</p><p>Pepco will try to recoup the $105 million through Mirants bankruptcy case. It will not raise rates for its 720,000 customers, spokesman Robert Dobkin said.</p><p>The new agreement, which is retroactive to Oct. 1, must be approved by the U.S. Bankruptcy Court in Fort Worth, Texas, where Mirant filed for Chapter 11 on July 14.</p><p>The agreement 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 of the utilitys parent, 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.</p><p>Pepco and Mirant said in a joint statement Monday they are glad they were able to resolve at least one of their disputes.</p><p>We view the proposed agreement as a significant, positive step for Mirant as it works through its bankruptcy proceeding, said Lisa D. Johnson, president of Mirants Mid-Atlantic operations.</p><p>The companies remain at odds over a separate agreement in which Pepco sells power to Mirant. That agreement, which runs until 2021, requires Mirant to buy power at rates that are significantly higher than market prices, Atlanta-based Mirant has said in bankruptcy court papers seeking to reject the contract.</p><p>___</p><p>On the Net:</p><p>HASH(0x28658d4)</p><p>HASH(0x2865958)</p>
