Ratepayer Suits to Go Forward, Judge Rules

As the Davis administration was being rocked Tuesday by the snowballing controversy surrounding its energy consultants, major energy suppliers suffered a setback of their own.

A federal judge ruled that a series of ratepayer cases against power companies must be heard by California courts.

The lawsuits claim that the suppliers unfairly manipulated supplies in violation of state law to drive up prices last summer and winter.

But the cases have been stalled for months, as energy companies battled in federal court to block the state court actions. The companies, using batteries of law large firms, argued that only the federal government has jurisdiction over wholesale electricity.

But on Tuesday, U.S. District Judge Robert H. Whaley, brought in from Washington to handle the matter, sided with the ratepayers. Congress never intended that federal oversight of electricity preempt the public’s legal rights under state law, Whaley ruled.

The venue victory, among other things, gives consumer attorneys broad power to press ahead with subpoenas for records from out-of-state power suppliers. They also may compel company officials to testify under oath about alleged illegal activities that siphoned billions of dollars out of California’s deregulated electricity market.

The state suits could also open large power companies to triple damages, if violations of California business law are proved, some attorneys said.

“It creates a whole new forum,” said attorney Michael Aguirre, who is representing a group of San Diego consumers who saw electricity bills skyrocket last year.

San Francisco Deputy City Atty. Theresa Mueller, who sued a long list of power suppliers in January on behalf of ratepayers across the state, said the ruling should break a litigation logjam created by the power sellers.

“They’ve tried to delay it . . . tried to get it out of California,” Mueller said. “We’re getting close to the time when the [companies] are finally going to have to produce some information.”

Spokesmen for power sellers declined to comment, saying they had not reviewed Whaley’s decision.

Aguirre and Mueller now expect their cases, and at least three similar suits, to be consolidated in one major class-action proceeding.