As one of five performance goals for his last year as CEO of Sempra Energy, Steve Baum told a Wall Street analysts meeting Tuesday that the company is aggressively involved in settlement negotiations for all of the major litigation hanging over from the 2000-2001 western energy crisis. Resolving this potentially multi-billion-dollar risk is one of the key goals for which Baum has taken responsibility before he retires at the end of January next year.

While not revealing any litigation strategies, both Baum and Sempra President/COO Don Felsinger, who eventually will replace Baum as CEO, spent time talking about the potential litigation amid presentations that were otherwise very upbeat with revised earnings estimates going out to 2009 with a targeted range of $3.70-4.20/share.

“Virtually everyone and anyone who did energy business in California and the West (in 2000-2001) has been the subject of litigation,” said Felsinger.

Acknowledging that a lot of the financial analysts have asked repeated questions about the pending litigation, Baum said there are many other cases besides the antitrust case set for trial this September involving allegations of restricting interstate natural gas pipelines from entering California (Continental Forge case), and Sempra is “in settlement discussions” in all of them, but he refused to say anything about the content of those discussions. Baum said the company has gone through a “rigorous” accounting analysis, setting a $240 million reserve for “all energy litigation.”

“At the end of the day, we continue to believe that our market activities are going to be validated,” said Felsinger, noting that pending litigation generally falls in three categories: (a) allegations aimed at market behavior, (b) antitrust as in the Continental Forge case, and (c) California’s challenge to Sempra’s $6.7 billion, 10-year wholesale power supply contract.

“We have followed all the rules and all the regulations, but nevertheless have been a target, in my mind, for some politicians because we have such a large presence in the state and we remain profitable and successful. We also own the only investor-owned (major) utilities in the state that didn’t fall into financial insolvency. We’re the deep pocket.”

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