The company, Oklahoma-based Williams Energy Marketing & Trading, operates a key generating plant in the Orange County community of Huntington Beach and another in the Long Beach area of Los Angeles. Both of the plants were taken offline last spring, just as power prices started shooting skyward.

Though Williams Energy officials say the plants were temporarily shut down for needed repairs, regulators have alleged that the 10-day closures were part of an attempt by Williams to force electricity prices even higher. Desperate for power, California's Independent System Operator--which is in charge of ensuring that homes and businesses have the electricity they need--was forced to buy power from another provider at 10 times the normal rate.

The FERC initially wanted Williams to repay $10.8 million, but accepted $8 million as a compromise. The company did nothing wrong, says Williams Energy spokeswoman Paula Hall-Collins, but agreed to the settlement "to put it behind us and move forward to more productive matters concerning California power issues."

The refund will go directly to the state's ISO, rather than being sent to residential and commercial property owners. The settlement does not affect another FERC investigation in which regulators believe Williams Energy was one of several power providers that overcharged the ISO a combined $124 million in the first two months of this year.