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State Lawmaker Accuses Sempra of Perjury; Company Denies

The California state senator who led two years of investigation of the wholesale energy market meltdown in the state Wednesday fired a shot at Sempra Energy's trading operation, alleging it lied to his special legislative committee in 2002 and saying he was referring his allegations to the Sacramento County district attorney.

Sempra Energy Trading strongly denied the allegations and issued its own prepared statement, noting the wholesale market falls under FERC jurisdiction and it was aware of the documents now being used to allege perjury.

State Sen. Joe Dunn, who is reportedly running for state attorney general, and the current attorney general, Bill Lockyer, have continued to pursue allegations involving Sempra's trading operations and the City of Los Angeles Department of Water and Power (LADWP), even though the Federal Energy Regulatory Commission has not acted on similar information that has caused Dunn to make his accusations. Sempra agreed in October 2003 to pay $7.2 million to settle allegations that its trading unit tried to manipulate the wholesale market during the 2000-2001 meltdown.

As part of Dunn's special state Senate committee investigation -- which has yet to publish a report on more than two years of hearings -- questionnaires were sent to all of the Western power market participants. A Sempra Energy Trading official said the company had not participated in any of the Enron-like trading strategies with the names of "Fat Boy," Ricochet" and "Death Star." Dunn's investigation subsequently uncovered internal Sempra documents that the state lawmaker contends showed the trading company had, in fact, participated in these schemes.

"We take lying to the legislature very seriously," said Dunn in a report in Thursday's Los Angeles Times.

But Sempra in its prepared reaction statement said that the allegations were false. "Sen. Dunn has cut and pasted together partial responses by the company and, in doing so, presented a distorted and inaccurate picture to the press and public," according to the trading unit's statement. "We are disappointed that Sen. Dunn has misrepresented Sempra Energy Trading's sworn testimony to suit his political purposes."

Sempra said its trading unit's responses to all state and federal investigations have been "truthful and accurate," and the company has provided thousands of pages of documentation as requested. The trading unit has "complied with the energy market rules and regulations" wherever it has operated, and Dunn's latest allegations contain nothing new, the company added.

In his latest blast, Dunn has focused on the alleged "lying" to the state legislature rather than allegations of illegal business practices in the wholesale energy market.

Dunn told the LA Times that he looked more closely at Sempra's past responses after an April 2004 state Senate Energy Committee hearing in which he said witnesses implicated Sempra. In addition to an internal e-mail that discusses re-selling wholesale power (to drive up the price), Dunn also alleged for the Times that a Sempra trader appeared to discuss "fake load." The state lawmaker is alleging this adds up to perjury on the part of the trading unit representative who answered earlier committee questionnaires.

In the past, Dunn has accused LADWP of being involved in a so-called "Ricochet" scheme, sending power out-of-state so it could be re-sold back into to the state to the California Independent System Operator (CAISO) at an inflated price. The large city-run utility's management has consistently denied it, and its COO Henry Martinez on Wednesday told the LA Times that LADWP has no concern that any alleged perjury occurred.

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