Two Power Sellers Agree to Settle Charges Related to State's Energy Crisis

Times Staff Writer

Federal energy regulators agreed Friday to settlements in market manipulation cases against Sempra Energy and Powerex Corp. and prepared to dismiss charges that several other power sellers face.

The settlements proposed by the Federal Energy Regulatory Commission staff would resolve accusations that Sempra and Powerex gamed the market and engaged in improper partnerships in the California energy crisis of 2000 and 2001.

In the larger of the two deals, the agency would accept $7.2 million from Sempra Energy Trading, the wholesale energy trading unit of San Diego-based Sempra. However, the company denied that it had engaged in improper behavior during the crisis.

"We entered into this settlement to end the mounting legal expenses and burden of a long, drawn-out litigation process that could stretch on well into next year," said Michael Goldstein, senior vice president of Sempra Energy Trading. "Although we did not engage in improper market activities, we wanted to forgo the distraction of a protracted legal battle and thought it best to put this matter behind us and focus on the future of our business and our customers."

The California attorney general's office said the proposed settlements were too lenient.

"It's more of the same of what we've come to expect from FERC and its staff: ladling out the exonerations for price gougers and handing out the justice for Californians with an eyedropper," said Tom Dresslar, spokesman for state Atty. Gen. Bill Lockyer.

"We're still reviewing the orders, but there's little question that we're going to object," he said.

The settlements proposed by the FERC staff must be approved by the commission.

Powerex, a subsidiary of British Columbia Hydro & Power Authority, agreed to pay $1.3 million but also proclaimed that it had not engaged in wrongful behavior. In a news release, Powerex seized on language from its settlement, in which FERC staff described the firm as a "valuable and reliable" energy supplier.

"We view this as complete exoneration on the charges in question and consistent with what we have said all along -- that allegations against us were totally unfounded and based purely on the politically driven agenda of California parties," said Doug Powers, Powerex vice president of marketing and trade policy.

Also Friday, an agency spokesman said that the FERC staff recommended dismissing charges related to gaming or improper partnerships against at least three other power sellers: Pacific Gas & Electric Co., Arizona Public Service Co. and the Northern California Power Agency.

Federal energy regulators have now reached more than 40 settlements and dismissals of charges related to behavior during the energy crisis, including a deal last month under which Reliant Resources Inc. would pay as much as $50 million. Nearly two dozen cases of market manipulation remain unsettled.

Regulators are continuing to conduct investigations into energy bidding practices and alleged energy withholding by companies in 2000 and 2001.

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