Sempra Accused of Plot to Reduce Energy Supply

Sempra Energy, owner of the largest U.S. natural gas utility, was accused in a class-action trial that began Wednesday of sparking California’s energy crisis by conspiring to limit the state’s gas supplies.

Pierce O’Donnell, a lawyer for utility customers, said Sempra agreed with El Paso Corp. in 1996 to prevent the construction of pipelines that would have brought more natural gas into the state. The lack of new fuel supplies sent electricity prices soaring, O’Donnell told jurors in San Diego Superior Court.

“They agreed to a conspiracy that formed the basis for a near-perfect scam that was the basis for bringing about the California energy crisis,” O’Donnell said.

The trial before Judge Ronald Prager is one of the first stemming from the California energy crisis of 2000 and 2001, when rolling blackouts cut off power to homes and businesses. Other energy companies, including Enron Corp., Mirant Corp. and El Paso, have settled market-manipulation claims for a total of about $5.3 billion.

Sempra, based in San Diego, is accused of hatching its plan with Houston-based El Paso at a 1996 meeting at a Phoenix Embassy Suites hotel. It was attended by 11 executives from Sempra’s San Diego Gas & Electric and Southern California Gas units, and El Paso, according to the suit filed five years ago.

The companies agreed to stop competing on pipeline projects and worked to block rivals from bringing more gas to California, O’Donnell said.

Sempra denies any conspiracy and says a glut of pipeline capacity deterred investors from funding new projects.

“There was no conspiracy here,” Sempra’s lawyer, Bob Cooper, said in court. Sempra and its utilities repeatedly asked regulators to investigate and limit rising prices in 2000, demonstrating that they weren’t seeking to push up prices, Cooper said.

Plaintiffs in this initial trial -- residential gas and electricity customers in Ventura County, plus Southern Edison Co.’s other residential power customers -- claim damages of $1.3 billion.

Claims of other customers, such as the city of Los Angeles, San Bernardino County and various individuals and companies, may be heard in later trials. The claims of nearly $8 billion would nearly triple to about $23 billion under antitrust laws.