While most have been disposed of or are lingering in court appeals, the blizzard of litigation after California’s wholesale energy market meltdown four years ago has spawned 236 separate lawsuits and a 42-page listing compiled by an attorney who has been involved in much of the litigation.
Energy attorney Gordon Erspamer, with Morrison & Foerster, outlined the litigation at the Law Seminars International two-day conference, “California Energy Markets,” that he co-chaired..
Nearly two dozen separate groups of lawsuits were filed, ranging from the early ones against various California state agencies to those against the Federal Energy Regulatory Commission (FERC) and energy producers and ultimately criminal actions against a few. Sixty-five cases were filed under unfair business practices and antitrust laws; another 42 cases related to natural gas pricing; and another 42 cases were aimed at utilities by various suppliers.
“The California energy crisis legislation came in a series of waves,” said Erspamer, noting the initial wave was in 1999-2000, before the crisis had fully hit. Initial cases were aimed at the now defunct California Power Exchange (Cal-PX), regarding some so-called charge-back fees it assessed against third parties who were tied to the private-sector utilities and began at that time being unable to pay their power purchase bills.
The Cal-PX is now close to announcing a settlement that will take care of all of its outstanding litigation and allow it to be officially closed after almost five years of Chapter 11 bankruptcy and post-bankruptcy proceedings, according to Erspamer.
“The Cal-PX is now negotiating a series of terms by which it will, in effect, dismiss a pending case and get out of any outstanding litigation all together,” he said. “That litigation also involves the investor-owned utilities.”
Another large chunk of litigation — not widely publicized — involved buyers throughout the West in direct access contracts trying to get out of them after the crisis hit. “A lot of them were paired with antitrust violations as the basis for getting out of the contracts,” Erspamer said. Municipal utilities and others — not just parties to the California Department of Water Resources (DWR) deals — were involved.
“I have spent the better part of the last four years trying a number of these cases throughout the West,” he said. “People have tried various ways to get out of these contracts, so far without much success. The antitrust cases under the state unfair business practices law have met a pretty universal death by dismissal based on federal preemption principles of the filed rate doctrine.”
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