Power sales lead to lawsuit

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

state.

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,

Stevenson said.

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

2001.

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.

QUESTION

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

purposes only.