Mark R. Madler
The city filed a lawsuit Thursday to recoup $6 million it claims it
is owed from Sempra Energy for the sale of excess electricity
generated by the city’s power plant in 2000 and 2001.
The lawsuit, filed in U.S. District Court in Los Angeles, was
characterized by an attorney for the city as being the fallout from
the state’s energy crisis from four years ago.
The Federal Energy Regulatory Commission ruled in March 2003 that
the city was due a refund for the power sold on its behalf by Sempra
Energy Trading Co. to two power agencies, Senior Assistant City Atty.
Terry Stevenson said.
“Sempra disagrees with this and doesn’t want to take the loss,”
Stevenson said. “They think our interpretation of the contract is
wrong and the refund liability rests with Burbank.”
Sempra spokeswoman Jennifer Andrews called the lawsuit unfortunate
and a surprise to the company.
“The agreement between Sempra and Burbank was that Sempra would
not be financially liable in the event the power agencies did not
pay,” Andrews said.
The city and Sempra entered into an agreement in 1999 to have
Sempra market the city’s excess power to California Power Exchange
Corp. and the California Independent System Operator Corp. in
exchange for a 20% cut of the profits.
The California Power Exchange oversaw power purchases for
California’s three utilities before closing in 2001.
The California Independent System Operator Corp. runs the
long-distance electricity transmission grid serving about 75% of the
The agreement was amended in August 2000 and then again in
December of 2000.
The final revision had Sempra giving up its 20% commissions
because it was concerned the power agencies would be able to pay,
The city stopped selling power through Sempra in February 2001 and
the agreement between the two expired in July 2001.
In July 2001, the federal regulatory agency ordered that refunds
would be given to energy providers who sold to the California Power
Exchange Corp. and the California Independent System Operator Corp.
between October 2000 and June 2001 because the prices charged at that
time were unfair and unreasonable.
During that time period, the market was being jerry rigged by
energy companies such as Enron Corp., Stevenson said.
Earlier this month, energy giant Enron agreed to pay $1.52-billion
to settle allegations of gouging state residents with high rates in
2000 and 2001. Enron filed for bankruptcy protection in December
Sempra is still waiting for the Federal Energy Regulatory
Commission to decide at what amount the refund should be made and
when it gets paid by the California Independent System Operator Corp.
the city will then get paid, Andrews said.
The city is seeking the $6.1 million in the lawsuit because that
is how much power was sold by Burbank between October 2000 and
February 2001, Stevenson said.
What do you think of the city’s decision to file a lawsuit? E-mail
your responses to burbankleader @latimes.com; mail them to the
Burbank Leader, 111 W. Wilson Ave., Glendale, CA 91203. Please spell
your name and include your address and phone number for verification