Nevada Accuses El Paso, Sempra of Collusion
Nevada’s attorney general has sued Houston-based El Paso Corp. and San Diego-based Sempra Energy, accusing the companies of conspiring with Enron Corp. and others to squeeze natural gas supplies to Nevada and California during the energy crisis of 2000-01 to inflate energy prices.
“This suit is necessary to recover damages and penalties on behalf of consumers who have been victimized by the collusion among these companies, which were in a position to dominate and manipulate the market,” Nevada Atty. Gen. Frankie Sue Del Papa said in a statement.
The antitrust lawsuit, which was filed Friday in Clark County State Court, mirrors lawsuits filed in California that claim that El Paso and Sempra, parent of Southern California Gas Co. and San Diego Gas & Electric Co., agreed to refrain from competing with each other by limiting expansion of competing pipelines. These include the Kern River Pipeline, which runs through the Las Vegas area on its way to the Central Valley.
The suit also echoes accusations made to federal regulators that El Paso withheld natural gas supplies on a key pipeline to California -- one owned by an El Paso subsidiary -- by placing a huge portion of the pipeline’s shipping capacity in the hands of another El Paso subsidiary. El Paso was aided in this effort by Enron and Dynegy Inc., which held the capacity for a time while El Paso worked out its plan to sell the pipeline capacity to a sister company, the lawsuit said.
But the Nevada lawsuit aired a new accusation: that El Paso conspired with Enron and Sempra to reap profit from the extraordinarily high natural gas prices of late 2000 and 2001 by selling derivatives contracts to the two companies.
El Paso repeatedly has said it had no motive to withhold gas supplies because it was locked into “hedge” contracts at below-market rates. El Paso has never named the purchasers of those contracts.
El Paso and Southern California Gas representatives said the charges were without merit, and Enron and Dynegy declined to comment. “Our interest is in lowering rates rather than raising them,” said Denise King, spokeswoman for Los Angeles-based Southern California Gas.
The suit names as defendants El Paso and Sempra Energy. Enron and Dynegy, both of Houston, were accused of conspiring with El Paso and Sempra to withhold supplies but were not named as defendants.
