Citing allegations from consumer groups and other opponents in past proceedings that were left unaddressed, the five-member California Public Utilities Commission Thursday in a split decision directed its staff to launch an investigation into the operations of San Diego-based Sempra Energy’s two major utilities in relation to various merchant energy businesses that Sempra also operates.

Company officials alleged that state regulators are taking the action as a means of pressuring Sempra to renegotiate a controversial $6.6 billion, 10-year power supply deal with the state.

Part of the new probe’s focus may zero in on natural gas prices during the state’s now-infamous 2000-2001 energy crisis. A Los Angeles Times report Thursday said that Sempra was working hard to squash the would-be investigation. Financial analysts are watching the developments with a wary eye because even if the investigation fails to turn up any wrongdoing, the existence of the probe could affect the company’s stock price, which is now the highest among California’s major private-sector utilities, and result in shareholder lawsuits.

Noting that Sempra has chosen to offer various merchant services in the territories of its two utilities, CPUC Commissioner Loretta Lynch said the company has “raised a red flag,” and it is a flag the commission should not ignore. Another commissioner supporting the investigation, Geoffrey Brown, clarified that the CPUC’s action is not like a criminal or civil grand jury probe of the companies, per se, but more an inquiry to determine the effectiveness of the state’s current rules related to affiliate transactions between utilities and their merchant sister companies.

On a vote of 3-2, the regulatory panel ordered an investigation that would expand an existing investigation into one utility’s — Southern California Gas Co.’s — past natural gas trading practices, look at alleged acknowledgments that in the past it signed some power supply contracts to increase shareholder profits, and homeowner complaints in north San Diego County that they are being asked to pay more for new San Diego Gas and Electric Co. transmission lines to help other non-utility businesses operated by Sempra in Baja California, Mexico.

When California embarked on electric industry restructuring in 1996, the CPUC established rules to keep a so-called “Chinese wall” between the utility and merchant operations under various utility holding companies. Sempra officials argue strongly that their businesses have carefully kept the utility operations separate, and the company has had an independent outside auditor verify that this separation has not been violated.

Frederick John, Sempra’s senior vice president, said the CPUC move looks like “a fishing expedition” that is only targeted at Sempra, and not the other two major utility holding companies, both of which are struggling financially compared to Sempra.

The CPUC’s two newest members, Michael Peevey and Susan Kennedy, voted against the order for an investigation. Peevey suggested the matter be handled instead with a informal, 60-day staff investigation, and Kennedy said she was bothered by a lack of evidence from past probes by the CPUC and others that would indicate the new investigation is needed.

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