The California Public Utilities Commission (CPUC) last Thursday unanimously approved allocating $113 million from two court-approved settlements reached by Sempra Energy and various natural gas distribution utilities, including Southern California Gas Co. (SoCalGas) and San Diego Gas and Electric Co. (SDG&E).
Five local distribution companies (LDC) will divide the funds that stem from a collection of lawsuits filed in 2000 that alleged that Sempra and others conspired to drive up wholesale natural gas prices at the California-Arizona border during California’s wholesale energy market meltdown a decade ago.
The state regulators characterized the refunds as “arising from settlements approved by the San Diego Superior Court to address scarcity in the natural gas market in 2000-2001 and manipulation of the published price of natural gas from 1999-2002.”
As a result of the CPUC action refunds will be made to residential and other core customers of Pacific Gas and Electric Co., Southwest Gas Corp., the Long Beach Municipal Gas Department, SoCalGas and SDG&E. The funds will be allocated on the basis of earlier refunds to LDC customers in El Paso Natural Gas settlement cases — 46.7%, 3.32%, 4.07%, 31.49% and 14.42%, respectively for the five utilities.
Civil lawsuits filed in 2000 alleged that major pipeline interests serving Southern California’s wholesale gas needs conspired to create “a scarcity in the natural gas markets,” according to CPUC Commissioner Timothy Alan Simon. These alleged actions contributed to the state’s energy crisis in 2000-01. The manipulation of wholesale gas border prices was allegedly carried out from 1999 to 2002, according to several lawsuits filed.
Simon said the proceeds are a result of settlements in two groups of cases. One group of cases relates to civil suits filed in 2000 alleging that major pipeline companies conspired to create a scarcity in the natural gas delivery market, which contributed to the energy crisis of 2000-2001. The other group of cases relate to a set of civil cases filed in 2003, which alleged that traders of natural gas manipulated the published price of natural gas in the California market from 1999 to 2002.
The CPUC was tasked by the courts to allocate the monies to the respective local utility companies that were affected. As part of the regulators’ action the five utilities will return the monies to customers in the form of one-time credits.
“I think we’re all pleased to see this resolved, although it has been a very long haul to get this money out in the system,” said CPUC President Michael Peevey.
A decade ago when utilities fell into or were on the brink of financial collapse, California’s natural gas and electricity woes were widely characterized as being caused as the “direct result of a conspiracy” among the natural gas industry’s most powerful Southern California players to preserve and maintain their market dominance that they had enjoyed for many years as monopolies, it was alleged in a class action suit filed by a Los Angeles law firm on behalf of a SoCalGas industrial customer and its 1,600 largest industrial customers as a group in 2000.
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