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Lockyer Files 2nd Sempra Suit in a Week

The latest action accuses the firm and its utilities of deceiving regulators about their ability to supply natural gas.

November 22, 2005|Elizabeth Douglass | Times Staff Writer

California Atty. Gen. Bill Lockyer on Monday slapped Sempra Energy with his second lawsuit in a week, this time accusing the San Diego company and its utilities of deceiving state regulators about their ability to supply natural gas to customers during the state's energy crisis.

The new action, filed in San Diego County Superior Court, further escalates a battle between Lockyer and Sempra that has spilled over into the courtroom where the power company is fighting a class-action lawsuit that also concerns the state's natural gas market. In that case, Sempra is on trial on charges that it tried to boost natural gas prices by limiting the state's supply.

On Monday, Lockyer and the California Public Utilities Commission accused Sempra, which owns Southern California Gas Co. and San Diego Gas & Electric Co., of telling the state agency that it could serve both its U.S. utility customers and an affiliate's customers in Mexico, when it knew there was not enough room in a key pipeline to fulfill both commitments.

In the midst of the 2000-01 energy market meltdown, insufficient pipeline capacity forced Sempra's San Diego utility to stop sending natural gas to its large business customers for 17 days, disrupting service, raising energy prices and forcing power plants to use more-polluting fuels, according to the lawsuit.

Sempra "misled the PUC by concealing relevant information ... based on what was best for its bottom line," violating state law that prohibits companies from deceiving the state utility regulator, the lawsuit said. The suit seeks at least $1 million in damages and civil penalties and the sale of assets.

W. Davis Smith, Sempra's associate general counsel, called the allegations in the suit "recycled from the energy crisis" and said the pipeline capacity shortfall was caused by uncharacteristically high demand for natural gas in San Diego Gas & Electric's territory. Smith said the timing of the new lawsuit was "unfortunate and questionable" because of the ongoing San Diego trial.

Last week, Lockyer sued Sempra's energy trading unit for allegedly engaging in Enron Corp.-like schemes that pushed up profit through false scheduling and manipulating electricity supplies. Sempra denied the allegations and accused Lockyer of digging up old issues to try to influence the San Diego trial and force the company into a settlement of its remaining energy-crisis-related disputes.

Robert Cooper, Sempra's attorney in the class-action case, told the trial judge Thursday that the company might move for a mistrial because of the publicity surrounding Lockyer's trading lawsuit.

"We continue to consider the necessity of seeking a mistrial," Cooper said Monday. "We will evaluate the proper course of action once we have reviewed the nature and extent of the publicity surrounding this second suit."

Lockyer spokesman Tom Dresslar dismissed Sempra's objections: "The defendant's whole motivation clearly is to divert attention from the law-breaking, the rule-breaking that gave rise to these lawsuits."

He added that Lockyer had discussed the first lawsuit with trial Judge Ronald Prager, who expressed confidence at the time that the jury would take seriously his admonition not to read or watch news involving Sempra.

Some Lockyer lawsuits filed against energy companies to recoup costs from the energy crisis haven't fared well in state court, with judges ruling that federal regulators hold responsibility for wholesale energy markets.

However, Lockyer's office has a better track record in negotiating financial settlements of energy crisis disputes with such companies, winning agreements valued at more than $5 billion.

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