Sempra Energy to pay $410 million to settle lawsuits stemming from Calif. energy crisis

Sempra Energy to pay $410M to settle energy suits

SAN DIEGO — Sempra Energy said Tuesday it has agreed to pay $410 million to settle claims that it gouged California on electricity contracts that were signed as the state struggled through an energy crisis a decade ago.

The San Diego-based owner of San Diego Gas & Electric Co. and the Southern California Gas Co. reached an agreement in principle with state and federal regulators for a cash settlement without acknowledging any wrongdoing, company spokesman Doug Kline said.

The California Public Utilities Commission approved the proposed settlement last week but it still will need approval from the Federal Energy Regulatory Commission, which is expected later this year, Kline said.

“The settlements will put hundreds of millions of dollars back into the pockets of California energy consumers who suffered blackouts and great economic harm during the energy crisis,” state Attorney General Jerry Brown said in a written statement.

“After nearly a decade of litigation with California parties over issues related to the state’s energy crisis, we are pleased to put these matters behind us,” Sempra Chairman and CEO Donald E. Felsinger said in his own statement. “We believe this is a fair and reasonable outcome for both out shareholders and the state of California.”

Sempra was among several energy companies sued over alleged wrongdoing during the crisis, when wholesale energy prices soared and the state suffered rolling blackouts. The suits claimed that the companies used Enron-style tactics to exploit California’s deregulated power system, create phony energy shortages, avoid market rules and generate profits, costing utility ratepayers as much as $9 billion.

The state has now negotiated more than $3.2 billion in settlements with energy companies to settle 39 claims of overcharging, state authorities said in a statement.

Four years ago, Sempra agreed to pay $377 million to settle claims that it manipulated natural gas supplies during the crisis to drive up prices.

The new settlement involves Sempra energy and commodities trading units. It calls for Sempra to provide reimbursement of $270 million to California utility customers, who still are being charged 30 to 40 cents a month on their gas and electric bills to pay off debt from energy crisis deals, said Jim Finefrock, a Brown spokesman.

Customers of San Diego Gas & Electric, Southern California Edison and Pacific Gas & Electric Co. will see their bills reduced next year by an amount to be set by the Public Utilities Commission, Finefrock said.

Sempra also will pay more than $100 million to settle separate claims by the Public Utilities Commission and the state Department of Water and Power, he said.

Most of the settlement money already is in reserve but it is expected to reduce first-quarter earnings by $96 million after taxes, or about 38 cents per share, Kline said.

The company’s quarterly earnings, which will be released May 4, already are expected to suffer from poor performance and disruption in its commodities unit, RBS Sempra Commodities. Sempra is selling the unit, which is a joint venture with the Royal Bank of Scotland. It deals in the international oil, metals, natural gas and power markets.

Sempra shares rose 16 cents to $49.18 in Wednesday afternoon trading.