Sempra Ordered to Turn Over Tapes

Times Staff Writer

Sempra Energy and more than a dozen other energy companies must provide hundreds of hours of recorded conversations with their natural gas traders to attorneys who are hoping to prove that they illegally inflated prices for California gas customers, a judge ruled Tuesday.

The ruling, which came after a daylong hearing, resolves one of many disputes that have emerged over the traders’ tapes in the case. The lawsuit is among a handful of outstanding cases that allege wrongdoing by energy companies during California’s 2000-01 energy crisis.

The case, being heard by Judge Ronald Prager in San Diego County Superior Court, pits Sempra and the likes of Duke Energy Corp., Reliant Energy Inc. and EnCana Corp. against the municipal and county governments of Los Angeles and San Diego, the University of California Regents, E. & J. Gallo Winery and more than a dozen of the state’s large natural gas consumers.

“This is quite significant, because the defendants have been so resistant to producing these tapes,” said Nanci Nishimura, an attorney representing several large natural gas users. The tapes, she added, “are a window into understanding what these traders did and it goes to intent and motive in their conduct.”


Sempra, which owns San Diego Gas & Electric Co. and Southern California Gas Co., characterized itself as a small player in the lawsuit, but spokesman Doug Kline said the company would comply with the judge’s ruling.

Peter Sheffield, a spokesman for Duke Energy, said the company and others had already offered to provide certain recordings. He added that Duke “acted appropriately and within the rules in California, and there is no indication that our traders manipulated the market prices during the energy crisis.”

But Nishimura and the other plaintiffs filed papers Tuesday that contained transcripts of conversations from tapes that had been previously provided by the energy companies. Several excerpts are reminiscent of conversations between gleeful electricity traders who declared that their trading moves would make Californians and “Grandma Millie” pay ever-higher prices for power.

In the natural gas case, there are examples of traders who agreed to buy the same amount of natural gas from each other in what is known as a “wash” trade, so they could report a high trade price to an industry publication whose trading reports set market prices for natural gas throughout the region.


The case, still in the initial stages, is related to a class-action antitrust lawsuit that Sempra settled this year. In that matter, Sempra was accused of conspiring with Houston-based El Paso Corp. to restrict natural gas supplies -- and thus raise prices -- during the energy crisis.