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CA Attorney General Files Another Lawsuit Against Sempra Energy

For the second time in less than a week, California Attorney General Bill Lockyer filed a lawsuit against San Diego-based Sempra Energy, parent to Southern California Gas Co. and San Diego Gas and Electric Co. In the latest action, Lockyer is joined by the California Public Utilities Commission, alleging that Sempra and its utilities lied to the state regulatory commission about it pipeline capacity adequacy in the late 1990s so it could serve natural gas supplies to a new power generation plant at Rosarito Beach in North Baja, Mexico.

AG Lockyer's lawsuit asks for penalties of at least $1 million against Sempra and the utilities as a deterrent against the alleged abuse being repeated. There are two causes of action for the suit filed in a state Superior Court in San Diego -- one for violation of the state's unfair business practices act, and the other for violating the CPUC rules.

"Sempra intentionally misled the CPUC by concealing relevant information concerning the possibilities of curtailment for existing customers," the lawsuit alleges. "Sempra extolled the overall benefits to existing ratepayers from serving Rosarito by referring to the benefits of spreading fixed costs over a wider customer base. In other words, Sempra contended that the system had excess capacity that was not being used and there was no need to construct new capacity to serve Rosarito."

At the same time, the AG's lawsuit alleges, Sempra was saying something entirely different internally.

In the 32-page filing, most of which have been kept confidential, it is alleged that Sempra and its two utilities gained approval to serve gas to an affiliate, Sempra Energy International, that in turn would supply the gas to the new gas-fired generation plant at Rosarito, "intentionally misleading the CPUC about the amount of available pipeline system capacity," a spokesperson for the AG's Office said.

CPUC rules that are at issue in the case involve allegedly "misleading" the regulators, and prohibitions against utilities giving preference to unregulated affiliates over the regulated utility in order to benefit the company's shareholders at the expense of utility ratepayers.

After gaining CPUC approval for the sale of the gas to the international affiliate, Sempra turned out not to have sufficient capacity in its transmission pipeline system, the AG lawsuit alleges. As a result, SDG&E had to curtail service to large industrial customers, mostly electric generation plants, which were burning more expensive, polluting oil to produce electricity for a 17-day period.

Sempra's motive, according to Lockyer's lawsuit, was to avoid having to eat extra costs in the project that would have been related if the pipeline had been expanded. "The deception allowed Sempra Energy International to win the contract, and permitted Sempra to spread the costs among SoCalGas' and SDG&E's ratepayers, the lawsuit said.

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