Sempra Energy on Wednesday said its third-quarter profit fell as it increased its litigation reserves by $189 million to defend itself against charges of conspiracy and market manipulation that gave rise to California’s energy crisis of 2000 and 2001.
The San Diego-based parent of two Southern California utilities is being sued in a class-action trial that started last week. The suit claims Sempra and two subsidiaries, Southern California Gas Co. and San Diego Gas & Electric, conspired with El Paso Natural Gas Corp. to prevent competition for cheaper Canadian natural gas and to protect their market dominance over the supply and transportation of natural gas into and within California, reaping enormous profits.
Plaintiffs in the class action include the state of California; the city and county of Los Angeles; San Bernardino County; the cities of Long Beach, Burbank, Glendale, Culver City, Vernon and Upland; Continental Forge Co. and other companies and individuals. The case also includes a class of more than 13 million California consumers who paid inflated gas and electric bills. The civil action seeks damages of nearly $24 billion.
On Oct. 29, Sempra Energy, announced that the companies had entered into a legal settlement with the County of Los Angeles and 11 other plaintiffs that resolved their claims related to the Continental Forge case. Terms of the agreement were not disclosed.
Sempra reported third-quarter net income of $221 million (86 cents per share), compared with $231 million (98 cents) for the like period a year earlier. Revenue rose 26 percent to $2.7 billion. Excluding items, such as the increase in reserves, the company reported third-quarter adjusted net income of $275 million ($1.07 per share), compared with $227 million (96 cents).
