There is still some potential silver lining in the one major dark cloud hovering around San Diego-based Sempra Energy’s otherwise bullish future, according to an analysis released Friday by Washington, DC-based Stanford Washington Research Group. The dark cloud is the trial scheduled later this year in a California Superior Court regarding allegations of California-Arizona border wholesale natural gas price fixing. The potential silver lining hangs on possible FERC preemption and the filed rate doctrine.

Last month, Sempra petitioned the Federal Energy Regulatory Commission for a declaratory order that would support preemption principles and the federal filed rate doctrine as blocking a California state court jury from calculating rates that would have to underpin damages awarded in any antitrust judgment. With or without FERC action, Sempra still may dodge this rather large pending legal bullet, according to the Stanford Washington Group’s Christine Tezak.

Tezak said the state court case in San Diego County could still be dismissed and/or the trial date now set for this fall could be pushed back. Sempra has asked for FERC to act on its petition by Aug. 1. The appeal to FERC is another attempt by Sempra to convince the California judge that there are fundamental federal questions involved in this case that need to be resolved at the federal level, she said.

“Unfortunately, for Sempra, successful settlement with the plaintiffs has proved elusive, Tezak said. “The outrageous sums the plaintiffs seek from Sempra alone ($6.8 billion before tripling), in our assessment, may have made it difficult for the plaintiffs to settle for a more reasonable sum.”

Noting that its legal and public policy analysis reaches what it called a “frustrating conclusion” that while the plaintiffs in the class action “don’t have much of a case” against Sempra, they could still wind up winning, which then brings up the question of the size of the damage award and whether Sempra would prevail on appeal, Tezak said.

With a new chairman at FERC, the question remains whether the federal commission will grant the declaratory order, and if it does, whether the state court will adhere to it or ignore it. The Stanford Washington Group’s analysis noted that it would be “relatively easy” for FERC to exert jurisdiction over the electricity part of the case, but not as clear when it comes to natural gas.

“What Sempra hopes to achieve with the declaratory order is a statement from [FERC] that it ‘fills the field’ of jurisdiction (field preemption and filed rate) when it comes to setting natural gas and electricity prices consistent with the logic offered in [two other cases — Texas-Ohio and Sierra Pacific],” Tezak said, noting that Sempra could subsequently use the FERC declaratory order as a basis for a California Appeals Court review and stay of the trial.

“The jury might be willing to find for the plaintiffs and even give them what they seek in damages, however, we believe that Sempra would have a very strong case on appeal that the FERC proceedings on the electricity markets more than fill the field both jurisdictionally and from a compensatory standpoint,” she said. “Why? Because the Federal Power Act is very clear that the FERC is responsible for ensuring just and reasonable rates in the wholesale electricity sector.”

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