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Bustamante Sues 5 Power Firms, Alleging Price-Fixing Conspiracy
Courts: Lieutenant governor and a legislator file on behalf of taxpayers.
Industry official says claim is 'totally without merit.'
By JULIE TAMAKI, Times Staff Writer
SACRAMENTO--Lt. Gov. Cruz Bustamante sued five big power generators Wednesday
in a bid to recover billions in taxpayer money.
Filed in Los Angeles County Superior Court, the lawsuit accuses the power
producers and 14 of their executives of engaging in a price-fixing conspiracy
that has drained California's treasury.
The companies are Duke Energy, Mirant Inc., Reliant Energy, Williams Energy
Services and Dynegy Inc.
"This energy cartel has basically scammed California taxpayers by
manipulating the energy market out of billions of dollars," Bustamante said.
In filing the lawsuit as private citizens on behalf of state taxpayers,
Bustamante and Assemblywoman Barbara Matthews (D-Tracy) are betting on a Los
Angeles jury to find that the companies colluded to manipulate the state's
energy market--a conclusion federal regulators have yet to draw.
The lawsuit comes on the heels of a proposal by Duke Energy to the Davis
administration that all state investigations and lawsuits into the company's
pricing activities be dropped in exchange for monetary concessions.
Bustamante said he would only consider withdrawing his suit if the companies
agreed to return all of their illegal profits.
Reliant spokesman Richard Wheatley described the legal action as another
example of the deteriorating business environment in California.
"The allegations are false, defamatory and totally without merit," he said.
"We will vigorously defend ourselves."
The lawsuit, which is available on Bustamante's Web site at
<http://www.ltg.ca.gov<;, contends that after the generators gained control of
19 power plants in California, they began setting electricity prices and
exerting "market power" to drive them up and keep them high.
The latter feat was accomplished in part by withholding supplies, the suit
says. Consequently, California's spending on electricity is expected to jump
from $7 billion in 1999to as much as $70 billion this year.
The document accuses the companies of raising their prices even after Davis
declared a state of emergency Jan. 17, and it cites a report by state
officials that the five companies acted like monopolists 98% of the time they
sold power to the California energy market.