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Sempra Seeks to Disqualify Lynch for 'Personal Bias' in Gas Cost Case

Sempra Seeks to Disqualify Lynch for 'Personal Bias' in Gas Cost Case

Sempra's utilities, Southern California Gas and San Diego Gas & Electric, have filed to have California Public Utilities Commissioner Loretta Lynch disqualified from voting on a case against the utilities involving Southern California border prices during the California crisis in 2000-2001. The utilities are charging her with personal bias against Sempra.

A CPUC administrative law judge (ALJ) recently offered a preliminary decision in the case saying SoCal Gas manipulated its incentive gas-buying program and abused its market power to drive up gas prices and increase price volatility during that time period (see NGI, Nov. 22).

The utilities' motion claims Lynch arranged a meeting and then set up local television reporters to "surreptitiously" record a private conversation between herself and Lee Schavrien, vice president of regulatory affairs for the Sempra Utilities. Schavrien had no knowledge the meeting was being recorded. The audio/video recording of the meeting then was aired on a local TV station under the heading "Power Play."

Noting it is illegal to record a conversation without the consent of all the parties in the conversation, the utilities said Lynch's action "demonstrates an actual bias against Sempra, making it probable she cannot render a fair and impartial decision in this proceeding." Further, Schavrien has filed a civil lawsuit against Lynch, for invasion of privacy and illegally taping the conversation. "Thus as a result of her own misconduct, Commissioner Lynch has now become so enmeshed in matters involving the Sempra utilities and their officers that she must be disqualified from participating further in this proceeding.

At the meeting between Schavrien and Lynch -- for which Lynch set up the time, place and actual table location -- Sempra's motion said Schavrien raised the issue of ex parte communication about a pending case, but Lynch assured him that was not an issue because she had already communicated with others in the case. After the meeting, Lynch notified CPUC authorities that Schavrien had violated ex parte rules.

Also, Sempra alleged Lynch had showed personal bias in attempting to have the case completed in time for her to vote on it before her term on the CPUC ends Dec. 31. Her influence on the schedule was disclosed by the ALJ in the case.

Since ALJ Charlotte F. TerKeurst's decision could be put to a vote as early as the CPUC's Dec.16 meeting, Sempra asked for a response to its motion within six days.

After a three-year investigation, TerKeurst issued a draft decision concluding that Southern California Gas effectively constrained supplies, driving up prices at the border, and profited from its actions through its gas cost incentive mechanism (GCIM). The proposed decision calls for SoCalGas to refund customers $28 million and make substantial changes to its GCIM. The refunds would cover so-called "ill-gotten profits." If the five-member CPUC agrees to take the action, the refunds would not cover "potential culpability" for possible harm done to noncore gas market participants.

Although both of Sempra's utilities are named in the proceeding, TerKeurst split off the SoCal Gas allegations into Phase 1-A of the proceeding, saying that issues regarding Sempra and its affiliates are being looked at in the second (1-B) phase of the CPUC probe.

SoCalGas had responded to what it called a "flawed, politically motivated" decision, saying it had provided uninterrupted service and saved $200 million in gas costs during the energy crisis.

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