A federal court in Nevada Monday preliminarily approved six proposed settlements in a class action lawsuit that accused energy firms of artificially inflating the price of natural gas in California and/or at the California border for more than a decade.
The settling defendant companies are Duke Energy Trading and Marketing LLC, Reliant Energy Inc., American Electric Power Co. Inc., El Paso Corp., Sempra Energy and e prime inc. and affiliated companies. The settlements provide $14.65 million in exchange for the release from all claims.
The settlements are in addition to six other settlements that were approved in 2007 with The Williams Cos., EnCana Corp. and affiliated WD Energy Services Inc., Dynegy Inc. and affiliates, Coral Energy Resources LP and CMS Energy Resources Management Co. and affiliates. The latest settlements were approved by the U.S. District Court for the District of Nevada and resolve the claims of all parties that purchased natural gas directly from defendants, their affiliates or co-conspirators in California and/or at the California border from Sept. 1, 1996 through Jan. 26 of this year.
The lawsuits allege that the defendant companies caused the price of natural gas to artificially increase by conducting prearranged "wash trades" and by reporting false price and volume information to published price indexes in violation of federal and California law. A wash trade, in which natural gas is sold to a counterparty and then bought back at the exact same price, may be designed to inflate revenues and trading volumes or possibly to manipulate gas prices and price indexes.
In addition to these violations, several defendant companies placed restrictions on pipelines transporting natural gas to and through California, causing purchasers to pay more for natural gas as a result, court documents alleged. The defendant companies disputed the allegations.
The court will decide on final approval of the settlements and the proposed plan of allocation at a hearing scheduled for Aug. 25.
Class members who wish to recover from both the 2007 and 2009 settlements must submit a proof of claim, the form for which can be obtained at www.FederalNaturalGasSettlements.com, by Oct. 15 of this year. A party's written request to not be included in the class must be postmarked by July 27.
Excluded from the class will be Pacific Gas & Electric Co., San Diego Gas & Electric, Southern California Gas Co., Southern California Edison Southwest Gas Corp., as well as federal, state and local governments and governmental agencies (including municipal utilities), defendant companies and named nonparty co-conspirators.
Class members who remain in the settlements can object or comment on the proposed settlements or request in writing to appear in court. Written objections or requests for appearance must be received by July 27.
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