In suits filed in San Diego Superior Court, the energy companies were accused of driving the price of natural gas in California more than six times higher than the national average, costing consumers "billions of dollars."
"These companies were working together during the energy crisis to make enormous profits for themselves at the expense of California consumers," said Nancy Fineman, an attorney for San Francisco and Santa Clara counties.
In addition to San Diego-based Sempra Energy and three subsidiaries – Sempra Energy Trading, San Diego Gas & Electric and Southern California Gas – energy companies Dynegy, Reliant Energy, Coral Energy Resources, EnCana Corp., Aquila and CMS Energy Corp. were named in the lawsuit.
Sempra spokesman Doug Kline was quick to label the suits "meritless."
"They are long on hyperbole, short on substance and teeming with false allegations," he said.
But Michael Shames, executive director of the Utility Consumers' Action Network in San Diego, said the lawsuits could cause a jurisdictional dispute between the state and federal governments.
"An investigation by the Federal Energy Regulatory Commission last year confirmed that gas prices had been manipulated," he said. "This is an attempt to try and wrest the case away from the FERC, which has been content to impose wrist slaps on natural gas traders.
"If California law is applied, these companies might be forced to divest more of their ill-gotten gains."
The suits center on allegations that natural gas traders doctored their prices to push California gas levels higher than they should have been during the energy crisis of 2000 and 2001. The energy firms are accused of "unfair and deceptive conduct" by overstating prices to natural gas price monitors and participating in "wash trades."
Wash trades involved two companies marking up their products above market levels and then simultaneously selling similar amounts to each other, with each booking the sales at exaggerated revenue levels.
"It was kind of an open secret in the industry that companies were working together to falsify prices," Fineman said.
As a result of the exaggerated sales activity and profits, others boosted their gas prices and rushed into the California market fearful natural gas pipeline capacity would be reached and they would be left out.
"The consumers are the ones who paid the price of this," Fineman said.
San Francisco and Santa Clara counties are seeking damages for paying inflated prices for natural gas. The suits do not involve any other local governments.
The suits are the latest in a volley of legal actions and investigations of pricing schemes by natural gas and electricity suppliers and marketers in California.
The federal Commodity Futures Trading Commission this year launched an investigation into natural gas pricing by Sempra Energy and other energy companies during late 2003.
The investigation centered on gas prices that soared more than 45 percent
from Thanksgiving to mid-December.
Michael Kinsman: (619) 293-1370; michael.kinsman@uniontrib.com