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BP Energy Agrees to $102M Settlement in California Natural Gas Overcharges

BP Energy Co. and affiliates have agreed to pay $102 million in damages to California in a settlement related to allegations that the BP plc unit intentionally overcharged the state for natural gas between 2003 and 2012, California Attorney General (AG) Xavier Becerra said Thursday.

The California Department of General Services was allowed under terms of three successive contracts with BP from March 2003 to August 2013 to cap the price it would pay for specific volumes of gas, according to the AG's office.

BP, Becerra said, regularly quoted and charged the state prices that violated that cap "and concealed its overpricing by providing false and misleading information."

A BP spokesperson told NGI, however, that the state's allegations were without merit.

"BP strongly believes it honestly and fairly met its obligations under its contracts with the state," the spokesperson said. "The state's Department of General Services confirmed its agreement to the terms of each transaction, and the state never attempted to exercise its right to seek price quotes from alternative suppliers as a result of any price provided by BP.

"But given the cost of protracted litigation and the unpredictability of outcomes at trial, BP has agreed to this compromise settlement for an amount well below what the state demanded in its complaint. We believe resolving this dispute in this manner is in the best interest of BP and its shareholders."

Becerra said the case began in July 2012, when a former BP employee filed a complaint alleging the overcharges. According to the complaint, BP knowingly quoted and charged prices in excess of the contractual price cap. AG investigators eventually concluded that BP was liable for overpricing.

The state, which had alleged that BP overcharged the state $150-300 million, was seeking triple damages under the False Claims Act, according to the lawsuit, State of California v. BP America Production Co., CGC-12-522063.

The $102 million payment is to be shared by the state and local agencies that purchased gas under the contracts, the former employee whistleblower, and the AG's office, Becerra said.

California isn't currently doing any business with BP as a natural gas provider, according to the AG's office. 

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