Post 1192: Sempra maintains innocence in gas price fixing, but will pay $700 million anyway: CNS

[Hans Laetz, Newsgroup Editor]

By HANS LAETZ
City News Service of Los Angeles

Sempra Settlement
LOS ANGELES (CNS) - Southland residential and business customers
will
share in a $400 million settlement with a utility company that
regulators
accused of making energy trades that inflated wholesale electricity
prices and
led to rolling blackouts in 2000 and 2001, state officials announced
today.

The $400 million committed today is on top of $300 million in
credits to
ratepayers that Sempra Energy had earlier agreed to pay, according to
the
California Public Utilities Commission.

CPUC President Michael Peevey said the benefits will be partly
directed
to ratepayers for Sempra's two subsidiaries, Southern California Gas
Co. and
San Diego Gas and Electric Co. The payment will also benefit customers
of
Southern California Edison and Pacific Gas & Electric, which also paid
inflated
rates for electricity, he said.

According to the PUC, the Sempra money will go to reduce the amount
of
outstanding loans that the state took out in 2000 and 2001 to buy
electricity
at prices that, it turns out, were inflated through actions by Sempra
subsidiaries. That power, in turn, was sold to California utilities to
keep the
lights on.

Sempra owns the two utilities regulated by the PUC, as well as a
commodities trading company that it owns along with the Royal Bank of
Scotland.
That trading company buys and sells natural gas futures contracts, and
is not
regulated by the PUC.

That unregulated subsidiary arm of Sempra had been accused by
federal
and state agencies of manipulating the generation of electricity, and
rigging
the sale price of natural gas used to generate electricity. Regulators
said the
methods were similar to those used by the now-defunct Enron Corp. of
Texas, and
other firms, that have also paid settlements.

The San Diego-based energy conglomerate did not admit that any
wrongdoing.

Its chief executive officer, Donald Felsinger, said the settlement
``is
a fair and reasonable outcome for both our shareholders and the state
of
California.''

Gov. Arnold Schwarzenegger said his administration has negotiated
$3.2
billion in settlements from various energy companies from the
2000-2001 trading
schemes, including Sempra and Enron.

``The people of California deserve affordable and reliable energy
supplies,'' Schwarzenegger said. ``I will continue to fight to ensure
lower
prices for residents and businesses across California as we move
forward with
important policies.''

Customers of Southern California Edison and Pacific Gas and
Electric
also were defrauded because those utilities had to pay inflated prices
for
wholesale electricity due to market manipulations by Sempra, Peevey
said. Those
ratepayers will also have bills lowered as part of the settlement, he
said.

A Sempra statement placed the value of the deal at $410 million,
and
said the expenditure will negatively affect the company's first-
quarter
financial results. The company's international oil marketing arm is
also
reporting poor performance this quarter, according to the company.

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