RIVERSIDE - Electricity customers in eastern San Diego County may be paying an average of about $35 per month to cover natural gas purchases made by the local electric utility under questionable hedge fund dealings, it was reported today.

An energy trader working for the Imperial Irrigation District made multi- million dollar natural gas deals on unrecorded phone lines, placing the utility and its customers on the hook for expensive losses in natural gas trading, the Desert Sun newspaper said.

A company official called that a serious breach of company policies, and the mistakes allowed energy companies to charge more for natural gas than the district felt it owed.

A report by a San Diego auditing company found "a lack of management oversight and violation of operating policies and procedures" by the Imperial County-based utility, which serves water and power to 135,000 accounts in the Indio and El Centro areas, as well as parts of eastern San Diego County.

Company general manager Charles Hosken was reportedly sacked last summer because of findings in the auditor's initial report.

The report cited the actions of one energy trader employed by the Imperial Irrigation District, who apparently still works there, as a "serious violation" of prudent trading procedures. That person's name was not released, but the district said it was in the process of disciplining him.

The natural gas was purchased on oral agreements and used to generate electricity. As a result of gas costs adjustments, the average Coachella Valley electric customer is paying about $75 a month, with about half of that attributable to improper trading losses, the newspaper reported.