Sempra Settles Power-Crisis Suits

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Sempra Energy and its Southern California Gas Co. subsidiary on Wednesday announced a $677 million settlement of lawsuits brought by the states of California and Nevada and the cities of Long Beach and Los Angeles stemming from the 2000 to 2001 power crisis.


The class-action lawsuits filed on behalf of Southern California Gas Co. and San Diego Gas & Electric Co. ratepayers alleged the two Sempra utilities overcharged customers for natural gas during the power crisis. In settling the lawsuits, Sempra and its utilities “vigorously deny any wrongdoing,” the company said in a statement announcing the settlement.


“This agreement will put the major pieces of energy-crisis litigation behind us,” said Stephen Baum, chairman of Sempra Energy. “This settlement will provide substantial benefits to millions of energy customers in California and Nevada.”


Under terms of the agreement, Sempra would pay $377 million in cash to the claimants, divided up in annual installments. Sempra’s generation unit would also reduce the price of its long-term power-supply contract to the state by a total of $300 million over the next six years. Sempra would also discount the price of its liquefied natural gas contracts to its utility subsidiaries.


Sempra also agreed to more regulatory oversight of its operations by the California Public Utilities Commission.


After taxes, the total cost of the settlement to Sempra would be $350 million, including a $100 million after-tax charge recorded in the fourth quarter of 2005. It also would provide more than $2 billion in benefits to users over the next decade.


The settlement agreement is subject to approval by the claimants, the San Diego Superior Court, the Nevada District Court for Clark County and the cities of Long Beach and Los Angeles.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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