Atlanta-based Georgia Natural Gas Co.(GNGC) has filed a complaint on behalf of SouthStar Energy Services LLC in Georgia’s Fulton County Superior Court to compel Dynegy Marketing and Trade to provide a “full and fair accounting” of its activities as the asset manager for SouthStar. The lawsuit alleges that Dynegy, despite “repeated requests,” has failed to provide necessary documentation and records of purchase and sales transactions.

SouthStar is a joint venture among subsidiaries of AGL Resources Inc. (GNGC), Dynegy Inc. and Piedmont Natural Gas Co. Inc., and it markets natural gas and related services to residential and small commercial customers in Georgia and to industrial customers in the Southeast. It markets natural gas to Georgia customers under the name Georgia Natural Gas.

“We regret that we must take this action, but Georgia Natural Gas Co. was left with absolutely no other alternative,” said Paula G. Rosput, CEO of AGL. “Given Dynegy’s repeated refusals to provide requested information, the only way that we can obtain the necessary information is to force their hand in court. It’s an unfortunate, but necessary, step.”

The lawsuit also alleges that Dynegy, as SouthStar’s agent, failed in its fiduciary responsibilities to provide regular accounting of key transactions involving SouthStar’s assets. The lawsuit charges that Dynegy deprived information, overstating the wholesale market price that Dynegy charged for SouthStar as its asset manager, and alleges that, in doing so, Dynegy diverted these unreported profits to its own trading book.

The lawsuit also alleges that Dynegy has “consistently misstated the value of the transactions” it performed as SouthStar’s agent and that after GNGC raised the issue with Dynegy earlier this year, Dynegy refused to provide information that would show how much money had been redirected from SouthStar to Dynegy.

“We launched our formal investigation when we determined asset management revenues at SouthStar appeared to be below what other gas marketers were experiencing in the volatile winter of 2000,” said Rosput. “From the outset of this partnership, we fully relied on Dynegy’s trading expertise to generate value for the business. It’s dispiriting, to say the least, when one of North America’s pre-eminent energy marketers seems incapable of providing even the most basic documentation of their trading activities.”

The lawsuit also alleges that the requested accounting is necessary to finally determine the full amount SouthStar lost in profits that were redirected to Dynegy. In addition to the information request, the lawsuit seeks both actual and punitive damages from Dynegy, as well as a court-ordered termination of its asset management agreement with SouthStar.

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