Class action lawsuits are bidding to overtake politicalfinger-pointing as more prevalent this week in the increasinglymurky California energy landscape. The cities of Los Angeles andLong Beach filed separate class action suits Wednesday in LosAngeles Superior Court against Sempra Energy’s two utilitycompanies and El Paso Natural Gas Co. for allegedly conspiring inthe mid-1990s to block the development of two new interstate gaspipelines into the state, resulting in excessively high prices atthe California-Arizona border. Action by the court is not expectedany time soon, according to Long Beach’s city attorney.

“There are now a number of class action lawsuits with similarallegations that we are confident will end up in the same court,”said Bob Shannon, Long Beach’s city attorney, who noted that hiscase is unique among them because it is the only one from a citywith a municipal natural gas utility. He said the suit claims thedamages continue, but asks minimum damages of $28 million coveringthe period of November 2000 through February 2001.

“Our suit is based along the same line of factual information asthe other two class action lawsuits,” Shannon said, noting that thecity is using the same private attorneys in Los Angeles who filedthe earlier class action suits.

As a result of the continuing gas price aberration at theCalifornia-Arizona border, retail gas bills in Long Beach havequadrupled in many cases, said Chris Garner, general manager of thecity gas and electric department, which has about two-thirds of itssupplies coming from the California border, with SoCalGastransporting the volumes to the city distribution system.

Saying that the Sempra companies are “stunned” by the lawsuit, aSoCalGas spokesperson in Los Angeles argued that “the conspiracytheories have no basis in reality.”

Los Angeles, which operates the largest municipal electricutility in the nation, LA Department of Water and Power (LADWP),has avoided the power price spikes and rolling blackouts that thestate’s major investor-owned utilities have struggled with formonths, but it has been hurt by prevailing wholesale natural gasprice spikes.

In the past years, LADWP has protected its native generation forLA residents with long-term gas deals, but for the extra power thatit has been selling into the California grid it has been dependenton spot supplies at the border, much like the Long Beach GasDepartment.

The issue for Long Beach was not its betting so heavily on thespot market, Garner said, but the buying at the California border.”The border price is so much higher than the SoCalGas price whichis based on them buying in the Permian Basin and then transportingover their firm contracts with El Paso and Transwestern PipelinesCos.

“SoCal was paying, say $5.50 in the basin and paying 50 cents totransport it to the border, so their cost was something like $6,compared to ours, which was closer to $12. This has all happenedsince November, when FERC made its changes.”

On Wednesday, Garner noted, the Permian price was $4.80, so itwould have cost SoCal $5.35; the price at Topock was $10.72,basically double for Long Beach.

In its lawsuit, Los Angeles City Attorney, James Hahn, who is aleading candidate for mayor, said the alleged conspiracy has led toboth natural gas “price-gouging” and has helped worsen thecontinuing electricity crisis in the state. LA alleges “unfair,unlawful and fraudulent business practices” along with violatingstate anti-trust laws.

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