News Release

SUPERVISOR DIANNE JACOB

DATE: July 29, 2004

CONTACT STEVE SCHMIDT AT 619-531-4766 or 619-206-9108

 

COUNTY FILES LAWSUIT AGAINST NATION'S LARGEST NATURAL GAS COMPANIES

SAN DIEGO - Sempra Energy and six other natural gas companies conspired to drive up the price of natural gas in San Diego County and reaped billions of dollars in unjust profits during the energy crisis of 2001, according to a lawsuit filed by the County of San Diego on Wednesday.

The lawsuit, filed in San Diego Superior Court, claims that natural gas companies used phony price data and sham transactions to create an artificial spike in natural gas prices throughout California, driving prices six times higher than the national average.

"These unscrupulous companies deliberately manipulated the natural gas market to make obscene profits at the expense of San Diego consumers," said Chairwoman Dianne Jacob who in 2001 called on the State to investigate electricity and natural gas price-fixing.

"San Diego County intends to see that these companies return their ill-gotten gains to the taxpayers of San Diego," said Supervisor Ron Roberts who was instrumental in seeking the lawsuit. "Companies who gouged San Diegans must be held accountable."

According to the lawsuit, employees of natural gas companies intentionally reported false price data to publishers of the industry's price indexes. These indexes would then publish false information, which ultimately raised the price of natural gas charged to San Diego consumers, the suit contends.

In addition, the lawsuit charges that natural gas companies engaged in hundreds of so-called "wash trades," in which companies would agree to simultaneously sell natural gas to each other at prices well above fair market value. These exaggerated transactions created the illusion of high demand in the California marketplace and increased profits.

The lawsuit was filed in San Diego County Superior Court because several of the defendants have headquarters here. In addition to San Diego-based Sempra Energy and three subsidiaries- Sempra Energy Trading, San Diego Gas and Electric and Southern California Gas- five other companies are named in the suit. They are Dynegy, Reliant Energy, Coral Energy Resources, EnCana Corp., Aquila and CMS Energy Corp.

San Diego is the third county in California to file suit against natural gas companies alleging price-fixing and unfair profits. San Francisco and Santa Clara counties filed similar suits in early July. The lawsuit was filed by the Burlingame, California-based law firm of Cotchett, Pitre, Simon & McCarthy. The firm represents the San Francisco and Santa Clara counties.