Separate class action lawsuits tied to California’s natural gasand electricity price spikes were filed Monday alleging that a”conspiracy” dating back to 1996 between Sempra Energy’s twoutility companies and El Paso Natural Gas has contributed to thestate’s skyrocketing energy prices and short supplies.

In a terse prepared statement from its San Diego headquarters,Sempra said it had not been served with a lawsuit, so it could notcomment on the merits of the allegations, but it added that “anyallegations that the company or its subsidiaries violatedanti-trust or other laws are completely false.” An El Pasospokesman also said the company had just learned of the suit andhadn’t had time to review it.

California’s current natural gas and electricity woes are the”direct result of a conspiracy among the natural gas industry’smost powerful Southern California players to preserve and maintainthe market dominance that they have enjoyed for many years asmonopolies,” it was alleged in a class action suit filed by a LosAngeles law firm on behalf of a SoCalGas industrial customer andits 1,600 largest industrial customers as a group.

A similar class action suit on behalf of 100,000 residential andsmall business electricity consumers was separately filed allegingthe same conspiracy has “endangered the state’s electricity systemand threatened its economy.”

Alleging restraint of trade and unfair competition/businesspractices, the 43- and 48-page mirror image suits maintain that thethree companies agreed to “refrain from competition, not tochallenge one another’s mergers, and to exchange reciprocalbenefits designed to eliminate competition.”

Both suits cite an alleged Sept. 25, 1996 meeting among “topexecutives” of the three companies named was held in Phoenix”secretly to hatch a conspiracy to dominate the unregulated aspectsof the natural gas and electricity markets.” At this time, the suitcontends, the representatives of the three companies agreed “not tocompete against each other in the Southern California and BajaCalifornia (Mexico) natural gas delivery markets.”

A typed agenda for the alleged meeting, listing executives —past and present — with the three companies and hand-writtendrawings are attached as addendums to the court filings. Thealleged illegal agreement was arrived at within weeks of the parentcompanies of SoCalGas and SDG&E announcing plans for a mergerthat led to the creation of Sempra in mid-1998 and prior to El Pasobuying Tenneco, which at the time had competing proposals forbringing new gas supplies to California and to Baja.

“They also conspired to prevent other pipelines from being builtthat would have competed against them and lowered natural gasprices in these markets,” the lawsuits filed by O’Donnell &Shaeffer LLP, an LA firm, alleged. “The conspirators sought toeliminate competition, take advantage of electric deregulation,drive up the price of natural gas and profit from the increasedprices.”

In its reaction, Sempra Monday noted that “until we are formallyserved, we cannot comment on any potential litigation claims,” butit reiterated that earlier in the month (Dec. 7) SDG&E filedfor emergency relief from FERC to impose price caps on gastransportation to the California border, and that, if approved,that would lower costs for California gas customers.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.