Class Action Suit Filed In California Vs Natural Gas Cos
Dow Jones Newswires
LOS ANGELES -- Two lawsuits seeking class action status were filed in Los Angeles Superior Court Monday alleging three major energy companies conspired to monoploize the natural gas market in southern California and artificially increase prices and create shortages.
The complaints name Sempra Energy (SRE) and its affiliates San Diego Gas & Electric Co. and Southern California Gas, along with El Paso Natural Gas Corp. as defendants.
The complaint claims the companies were involved in "massive conspiracy" and together agreed to artificially constrict the supply of the commodity by killing natural gas pipeline projects. The complaint alleges unfair competition and unlawful business practices.
According to the complaint, top executives of SoCal Gas, SDG&E and El Paso Natural Gas Corp. met at a Phoenix hotel in 1996 and "fearing a new era of open competition and lower (natural gas) prices" the executives "gathered secretly to hatch a conspiracy to dominate the unregulated aspects of the natural gas and electricity markets."
"At the meeting these three companies illegally agreed not to compete against each other in Southern California and Baja California natural gas delivery markets," the complaint states. "They also conspired to prevent other pipelines from being built that would have competed against them and lowere natural gas prices in these markets."
The defendants have not yet seen a copy of the complaint and were unable to comment.
The lawsuit claims that El Paso Natural Gas and Sempra and its afilliates conspired to prevent other pipelines from being built that would have competed against them resulting in lower natural gas prices.
The plaintiffs are seeking billions of dollars in damages.
The complaint alleges that in 1992 Tenneco Inc. completed the Kern River Pipeline, which transports natural gas from Wyoming to Kern County, Calif.
Tenneco then began to plan for additional pipelines that would bypass SoCal Gas and SDG&E pipelines and deliver gas directly to consumers in San Diego, Los Angeles, Imperial Valley and the Baja Peninisula.
One of those bypass pipelines - the Altamont pipeline -would have transportecd gas from Canada to the northern end of the kern River pipeline in Wyoming. Tenneco envisioned that low cost Canadian gas would be carried to Southern California and Baja customers, according to the complaint.
El Paso acquired Tenneco in June 1996, shortly before California opened up its electricity market to competition.
According to the complaint, three months later SoCal Gas, SDG&E and El Paso met at the Embassy Suites Hotel near the Phoenix airport and began to hatch a conspiracy that the energy companies would eliminate Tenneco's pipeline projects and continue to dominate the natural gas market via SoCal Gas being the sole bidder on the Baja pipeline.
SoCal Gas then allegedly agreed to refrain from competing with El Paso on a pipeline project in Mexico.
"The transportation constraints which the conspirators created eliminate competition from Canadian gas, radically drove up the price of gas ... (and) electricity ...and discouraged the building of new electric generation plants to serve the California market," the complaint states.
Natural gas in California has spiked to a record $60 per million British thermal unit last week and still hovers at around $20/mbtu, compared with $3 a year ago.
Sempra Energy spokesman Art Larson said his company has not yet been served with a copy of the complaint, but "any claims that (Sempra) violated antitrust or other laws are completely false."
"On Dec. 7, SDG&E filed for emergency relief asking federal regulators to impose a price cap on natural gas transportation prices to the California border that if approved would lower costs for California gas customers," Larson said.
Last Friday, California Gov. Gray Davis asked state Attorney General Bill Lockyer to investigate whether natural gas suppliers have manipulated the market in an effort to drive up prices. |
