Sempra to face trial Sept. 2

By: North County Times wire services | Thursday, January 20, 2005 10:23 PM PST ∞

SAN DIEGO ---- A lawsuit alleging that Sempra Energy conspired with a natural gas company to manipulate the market, leading to California's energy crisis in 2000 and 2001, will go to trial Sept. 2, it was announced Thursday.

According to the class-action suit ----- originally filed in December 2000 ---- Sempra and its Southern California Gas Co. and San Diego Gas & Electric Co. units conspired with El Paso Natural Gas Corp. to prevent competition for cheaper and more plentiful Canadian natural gas.

The suit also alleges that Sempra and its companies conspired to protect their respective market dominance over the supply and transportation of natural gas into and within California, reaping enormous profits at the expense of California consumers and businesses.

On June 3, Judge Ronald Prager may decide what issues will be decided by a jury, Sempra officials said.

"After years of legal discovery, including the review of millions of pages of documents, Sempra Energy and our subsidiaries ---- Southern California Gas Co. and San Diego Gas & Electric ---- are confident of refuting the plaintiffs' fictional theories and insupportable allegations," said W. Davis Smith, general counsel for the subsidiaries.

"The filings in this case make it clear there is no factual basis for the plaintiffs' claims," Smith said. "When appropriate, we expect to demonstrate in court that the plaintiffs' unfounded theories are contradicted by their own evidence. We also expect to prove that their monetary claims ---- grossly inflated to attract media attention ---- are baseless."

Economists estimate that damages caused by excessive energy costs in 2000 and 2001 amount to more than $9 billion, the plaintiffs contend.

That amount would be tripled under California's antitrust law, the plaintiffs said.

The evidence against Sempra that plaintiffs said they would present includes details of a clandestine meeting at a Phoenix hotel involving 11 senior SoCalGas, SDG&E and El Paso executives in September 1996.

The plaintiffs said they will offer evidence that, without any legal counsel present, the executives unlawfully agreed to cooperate rather than compete with each other in supplying and delivering natural gas, resulting in an artificially constrained supply of natural gas and escalating prices to Californians for gas and the electricity it was used to generate.

Smith said Sempra expects to demonstrate that the increase in natural gas prices during the Western energy crisis of 2000-01 was caused by the convergence of events over which Sempra Energy and its utilities had no control.

Those events include the impact of drought conditions in the Pacific Northwest curtailing hydroelectric output, combined with an unseasonably hot summer followed by an unusually cold winter; an interruption of supplies due to an explosion on El Paso's interstate natural gas pipeline serving California; and an unanticipated shutdown of a Southern California nuclear generating facility.

The factors and others led to record use of gas-fired power generation, Smith said.

Plaintiffs in the class-action suit include the people of California; the city and county of Los Angeles; San Bernardino County; the cities of Long Beach, Burbank, Glendale, Culver City, Vernon and Upland; Continental Forge Co.; and numerous other companies and individuals.

The case also includes a class of more than 13 million California consumers who paid excessive gas and electric bills.

El Paso, the nation's largest natural gas pipeline company, settled the antitrust conspiracy charges against it in December 2003, agreeing to pay $1.7 billion for the benefit of the class, the plaintiffs said.

First name only. Comments including last names, contact addresses, e-mail addresses or phone numbers will be deleted. Attempts to misrepresent your identity or impersonate any person will not be approved. All comments are screened before they appear online, so please keep them brief. Comments reflect the views of those commenting and not necessarily those of the North County Times or its staff writers. Click here to view additional comment policies.