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State Asks Judge to Void Sempra's Electricity Contract

July 03, 2002|NANCY RIVERA BROOKS | TIMES STAFF WRITER

In a lawsuit designed to break a $7-billion electricity contract, the state Department of Water Resources on Tuesday accused Sempra Energy of fraud for allegedly lying about its ability to build a new power plant to deliver electricity this summer.

DWR contends that Sempra promised to supply power this summer and beyond from plants it would build, but instead is buying power and reselling it to DWR.

Sempra says it is building plants capable of supplying 2,100 megawatts of power but it also is able to acquire power from other sources under the contract.

The suit, filed in San Diego Superior Court, says Sempra "induced the department to enter into a long-term contract by misrepresenting its intent to build new plants and supply the department power from those plants to the detriment of the state and prior consumers."

San Diego-based Sempra lashed back, saying that the charges are without merit and that state officials are "playing a game of Russian roulette with the state's energy future."

"Their reckless political shenanigans are undermining the very contracts that serve as the foundation for getting new power plants built--plants that they acknowledge are necessary to serve California's current and future energy needs," said Michael R. Niggli, president of Sempra Energy Resources, the power-plant-building arm of Sempra Energy.

The 10-year agreement for as much as 1,900 megawatts was reached last year as the state signed $43 billion in long-term electricity contracts to tame power prices during the worst of California's energy crisis.

The state since then has been struggling to renegotiate those contracts.

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