The 480 MW El Dorado power plant in Nevada may become a utility owned and operated facility under provisions of a $5 million settlement that Sempra Energy and its two California utilities reached with the state regulatory commission and attorney general’s office, Sempra announced Friday. San Diego-based Sempra placed the after-tax cost of the settlement at “less than $5 million.”

Sempra and the utilities denied any wrongdoing as part of the settlement agreement.

This case, one of many California energy crisis-inspired legal actions involving Sempra and other major energy companies operating in the state, involved allegations Sempra’s utilities and affiliates lied to the California Public Utilities Commission (CPUC) about its pipeline capacity adequacy in the late 1990s so they could serve a power plant in North Baja, and subsequently curtailed industrial natural gas customers served by San Diego Gas and Electric Co. California Attorney General Bill Lockyer sued on behalf of the CPUC in state Superior Court in San Diego late last year (see Daily/GPI, Nov. 28, 2005).

CPUC President Michael Peevey said the deal provides “significant benefits to SDG&E’s customers far beyond the cash payment, as the El Dorado power plant is an efficient natural gas combined-cycle power generating station with remaining useful life of at least 20 years. After SDG&E’s competitive solicitation for capacity is completed later this year, the CPUC will be better able to determine the expected value of this option, which exceeds $100 million when compared to the market price referent.”

Peevey added that another key provision of the settlement requires that Sempra’s utilities disclose more information about changes in utility operations or services that may benefit one of its nonutility affiliates.

“Virtually every energy company doing business in California during the energy crisis has been the subject of litigation and regulatory probes,” said Sempra President Neal Schmale. “Removing the financial uncertainties of these energy-crisis-related cases allows us to keep our attention focused on building the new energy infrastructure required to meet the current and future needs of our customers. We look forward to resolving the remainder of these cases.”

(Sempra noted that this settlement does not include a separate action by the state attorney general, also filed last November, that is aimed at the energy holding company’s trading unit, Sempra Commodities.)

Sempra said that one of the agreement’s conditions is that within 90 days, the CPUC will close its investigation into higher prices for natural gas at the California-Arizona border that were experienced in the midst of the 2000-2001 crisis, and an investigation into affiliate-compliance issues.

“The closing of the border price investigation will ensure that SoCalGas and SDG&E retain regulatory incentive awards previously recorded as income, that were subject to refund in the CPUC proceeding,” said a Sempra spokesperson.

Settlement provisions include:

The lawsuit alleged that Sempra “intentionally misled the CPUC by concealing relevant information concerning the possibilities of curtailment for existing customers,” contending its system had excessive capacity that later proved elusive.

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