El Paso Pledges to Aid Probes of Other Firms
As part of its $1.7-billion preliminary settlement of market manipulation complaints, El Paso Corp. promised to cooperate with investigations of other companies -- which could aid antitrust lawsuits targeting Sempra Energy, attorneys said Friday.
The two companies were named in several suits accusing them of conspiring to limit the building of natural gas pipelines to California. With El Paso announcing Friday a deal to settle regulatory complaints and civil lawsuits, lawyers said, the legal spotlight now falls on San Diego-based Sempra and its two utility subsidiaries, Southern California Gas Co. and San Diego Gas & Electric. Both have denied wrongdoing.
“In terms of the initial impetus for the companies getting together, it was that deregulation threatened Southern California Gas’ dominance in the marketplace,” said antitrust lawyer Carole E. Handler, a lead attorney in one of several civil suits that were consolidated in San Diego Superior Court. “That now is going to be coming back into focus.”
Handler and others believe that the settlement language -- which calls for El Paso to cooperate with investigations -- can be used by civil attorneys targeting Sempra. “It’s part of the understanding,” she said.
The San Diego suits accuse El Paso and the Sempra utilities of contributing to the state’s energy crisis by killing key natural gas pipeline projects that would have brought more and cheaper gas to California consumers.
The Nevada attorney general’s office has filed a similar suit in that state and expects El Paso to aid its case, said Timothy Hay, chief deputy attorney general.
“We have been concentrating on El Paso for the last several months. Sempra will be the next one in the queue,” Hay said. The San Diego and Nevada cases have preliminary trial dates in early 2004.
Denise King, a spokeswoman for the Sempra-owned utilities, said the company did nothing wrong and is vigorously fighting the accusations.
“The allegation regarding a conspiracy to prevent construction of a new pipeline and allegations of activities designed to raise the price of natural gas are complete fabrications and make no sense,” King said.
El Paso executives told investors Friday that the settlement would wipe away most of the Houston company’s exposure to lawsuits and regulatory complaints related to the California energy crisis. The settlement with California agencies, utilities and others could be worth $1.7 billion in cash, stock, natural gas and discounts on electricity over as many as 20 years.
The company said the settlement would result in a $900-million pretax charge for the fourth quarter of 2002, representing the current value of the deal discounted by 10%.
Separately, the Federal Energy Regulatory Commission said it would release Wednesday the majority of documents generated by its investigation into market manipulation as well as evidence submitted by California officials to bolster a demand for $9 billion in refunds for electricity overcharges during the energy crisis. FERC has said it will issue rulings on those matters at its meeting Wednesday.
