Sempra Energy to pay $377 million to settle energy crisis lawsuits
Thursday, January 5th 2006, 8:45 am
By: News On 6
SAN DIEGO (AP) _ A $377 settlement with Sempra Energy to resolve allegations the company schemed to limit supplies and drive up prices during an energy crisis five years ago will net savings for California and Nevada ratepayers, officials said.
The San Diego-based company announced the settlement Wednesday. It admits no wrongdoing in the deal.
Under the settlement, Sempra will lower by $300 million the amount California is charged under long-term power contracts reached during the height of the energy crisis, the company said.
California ratepayers will see a reduction in their bills, but it is unclear by how much, said Pierce O'Donnell, lead counsel for the plaintiffs. Nevada Attorney General George Chanos said his state's $30 million share will be paid over the next seven years, and southern Nevada ratepayers will benefit.
The settlement came in the midst of a jury trial in San Diego Superior Court that threatened to bankrupt the company with potential damages as high as $23 billion.
``An adverse jury verdict upheld on appeal would have been fatal to the company,'' said Stephen L. Baum, Sempra's chairman. ``We're not in the business of betting the company.''
Sempra went on trial Oct. 24 in a lawsuit filed in 2000 against two Sempra-owned utilities, Southern California Gas Co. and San Diego Gas & Electric.
The lawsuit claimed executives of SoCal Gas, SDG&E and El Paso Corp. met in a Phoenix hotel room in 1996 and agreed to ``carve up'' markets in California and northern Mexico, avoiding competition that would have benefited consumers in a newly deregulated market.
Plaintiffs included Continental Forge Co., a Compton aluminum parts company hit hard by skyrocketing natural gas prices, the city and county of Los Angeles and the city of Long Beach.
The agreement did not resolve lawsuits brought in November by California Attorney General Bill Lockyer, who accused a company affiliate of using illegal, Enron-like tactics to generate hundreds of millions of dollars from higher electricity prices. Baum said the remaining litigation against the company was ``manageable'' and he expected Lockyer's lawsuits would be dismissed.
Nathan Barankin, a spokesman for Lockyer, said the attorney general's case was strong.
``What the state of California expects to recover as a result of our lawsuits goes well above and beyond the resolution that was reached today,'' said Barankin.
With changes in Sempra's utility and natural gas operations, the settlement will ultimately yield more than $1.8 billion in cost benefits, according to a statement by plaintiffs' attorneys. Sempra reported net income of $895 million last year on $9.4 billion in revenue.
The settlement is subject to approval by Superior Court Judge Ronald Prager, Clark County, Nev., District Court and the cities of Los Angeles and Long Beach, a process that could take six months or more.