Energy Legal Blog

Sempra Tries For a 'Hail Mary' to Keep Jury From Hearing State Antitrust Suit

On June 22, 2005, Sempra Energy and its utility subsidiaries, Southern California Gas Company and San Diego Gas & Electric Company (collectively "Sempra"), petitioned FERC for an order declaring that the claims made in an antitrust lawsuit pending in state court in San Diego impermissibly intrude upon FERC's jurisdiction.  A FERC decision due on the petition is anticipated on the eve of trial and as a consequence may undercut the claims in the massive litigation stemming from the western power crisis of 2000-2001.

The litigation under California state antitrust and unfair competition laws commenced in September 2000 and now includes as plaintiffs classes representing most of the natural gas consumers served by the Golden State’s regulated utilities between July 2000 and July 2001, most of the electricity customers served by the state’s regulated utilities between July 2000 and August 2003, and a number of individual companies, counties and municipalities ("Plaintiffs").  The core allegation is that Sempra and El Paso Corporation ("El Paso") in 1996 agreed to, and thereafter undertook a variety of acts in furtherance of, a conspiracy enabling them to restrict supply of natural gas in California, and, ultimately, to raise the commodity price.  (El Paso eventually settled the case, leaving Sempra to defend itself alone.)  Restricted natural gas supply, the Plaintiffs contend, caused (or least exacerbated) the western energy crisis and resulted in charges that were much higher than they would have been absent the alleged Sempra-El Paso conspiracy.

The Plaintiffs have successfully navigated numerous obstacles throughout the course of this litigation and are now poised to begin presenting their case to a jury starting in early September of this year.  Sempra's petition seeks to pull the rug out from under the Plaintiffs' claims.  Sempra seeks a FERC declaration that the task for the antitrust jury – deciding the proper level of wholesale electric and gas rates during the California energy crisis – would invade matters subject to FERC's exclusive jurisdiction, and hence, are preempted.  Congress' decision to deregulate most natural gas prices, the petition claims, does not mean that states can step in to regulate those same prices by means of state antitrust laws.

Sempra asked FERC to rule on its petition by August 1^st.  (FERC Docket No. EL05-130) [UPDATE]