Lockyer to Sue Sempra Division
California Atty. Gen. Bill Lockyer will sue Sempra Energy Trading today, accusing the San Diego company of using Enron Corp.-style schemes to manipulate electricity prices during the state’s energy crisis, according to a statement from Lockyer’s office released late Tuesday.
The lawsuit, to be filed in Sacramento County Superior Court, comes amid an apparent breakdown in settlement talks between the state and Sempra Energy, the trading firm’s parent. The two sides -- along with other parties -- had been trying to negotiate a deal to resolve disputes that stemmed from the 2000-01 energy market meltdown.
Lockyer spokesman Tom Dresslar said Sempra’s actions had been under investigation for a long time. “Eventually we reach a point where we litigate or we reach a settlement of our claims,” he said. “In this particular case, we’re litigating the claims.”
The lawsuit will allege that Sempra’s wholesale energy trading arm “manipulated wholesale electricity prices on a large scale ... through widespread use of Enron-devised schemes,” Lockyer’s statement said.
Using tactics with code names such as “Get Shorty” and “Death Star,” Enron employees drove up power prices and created phony electricity traffic jams, according to documents uncovered after the crisis.
A Sempra spokesman wasn’t available late Tuesday to comment on the expected lawsuit. In November 2003, the company agreed to pay $7.2 million to settle similar allegations in a case at the Federal Energy Regulatory Commission. At the time, Sempra denied that it gamed the market and said it agreed to the payment to end the litigation.
Earlier Tuesday, Sempra accused Lockyer of improperly using the prospect of new litigation to compel the company into a costly settlement even as it fought a class-action lawsuit in front of a San Diego jury. In that case, Sempra, which owns Southern California Gas Co. and San Diego Gas & Electric Co., is accused of scheming to restrict California’s natural gas supplies.
Sempra attorney Bob Cooper said Lockyer had been threatening to file a new lawsuit in San Diego. Such a move would be “irresponsible and inappropriate” and would “have an inflammatory effect on the San Diego jury,” Cooper said.
“We met with the judge [Tuesday] and forewarned him about the lawsuit,” Cooper said, adding that the judge “did not express a view one way or another.”
Sempra also disclosed the threat of new litigation Tuesday in a Securities and Exchange Commission filing. Although Sempra has been in settlement talks with many parties, “there can be no assurance that these negotiations will be successful or that they will continue,” the company said.
Sempra added, “if the negotiations are unsuccessful, additional litigation and legal proceedings will be instituted against Sempra Energy and its subsidiaries by the California attorney general, regulatory agencies and other parties.”
Sempra has said that it is pushing for a comprehensive settlement that would extricate the company from the legal morass that has dogged a long list of energy companies since the energy crisis. This month, Sempra Chief Executive Steve Baum said he hoped to accomplish that by the end of the year.
