A San Diego County state Superior Court judge has set for trial a class-action lawsuit alleging Sempra Energy and its two California utilities conspired with El Paso Natural Gas Corp. and others to raise wholesale natural gas prices at the California-Arizona border during the energy crisis of 2000-2001. The plaintiffs said that economists estimated there could be $9 billion in potential damages involved.

Sempra last Friday filed with a state appellate court asking for the lower court ruling to be set aside and the motion by the utilities to be granted. The motion called the case “frivolous and without merit,” making “inferences that are not backed up by hard evidence.” A Sempra spokesperson said Monday that they expect to hear from the appellate court in the next 30 to 60 days, and it is “unclear” whether the class action lawsuit will ever come to trial.

“Obviously, we are extremely disappointed by the judge’s action,” said a Sempra spokesperson in Los Angeles. “We knew there were some hurdles to a summary judgment, but we expected it to be granted. It is too bad the frivolous lawsuits are allowed to get this far. We will vigorously oppose these allegations, which are utterly without merit. There was never any conspiracy.”

The plaintiffs’ attorneys said they expect the trial to begin next year. Judge Ronald S. Prager replaced retiring Judge Richard Haden Oct. 1. Haden first rejected the Sempra motion for summary judgment Sept. 16, and then on Sept. 30 rejected three such motions by the utility holding company.

A source at a competing major California utility characterized the judge’s rejection of Sempra’s four motions for summary judgment as very significant, setting the stage for a major legal case carrying huge implications for the San Diego-based utility holding company and its two major subsidiaries, San Diego Gas and Electric Co. (SDG&E) and Southern California Gas Co.

Plaintiffs in the case, which include the city and county of Los Angeles, San Bernardino County, six smaller cities in Los Angeles County, and a major industrial customer, Continental Forge, contended in an announcement on the legal proceedings Monday that one of Sempra’s outside counsel called the case potentially “life threatening” to Sempra. (Although the plaintiffs claim the state of California is also a party, Sempra’s attorneys said that was not the case.)

The allegations in the four-year-old case are that Sempra’s utilities and El Paso conspired to prevent consumers in the state from accessing cheaper, more plentiful Canadian gas, creating windfall size profits for the gas companies. At the heart of the class action lawsuit and several other legal actions was an alleged secret meeting in September 1996 where 11 senior executives from SoCalGas, SDG&E and El Paso met in a Phoenix hotel with attorneys present to agree not to compete for supply to the southern half of California.

The plaintiffs said Monday that Haden found what they characterized as “genuine issues of material fact regarding the alleged conspiracy that necessitate a jury trial.” Among the facts submitted by the plaintiffs that the judge found compelling were:

The class action lawsuit was originally filed in September 2000 at the outset of California’s energy crisis. More than six million pages of documents have been reviewed and 65 depositions taken over the past four years, the plaintiffs said.

“The California energy crisis in 2000-2001 was no accident,” said Thomas Girardi, a Los Angeles-based attorney who is the lead attorney for the plaintiffs. “They’re greedy defendants who manipulated the market shamelessly to gouge Californians.”

©Copyright 2004 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.