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Enron Mail |
Cc: christi.nicolay@enron.com, phillip.allen@enron.com, john.lavorato@enron.com
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From: "Pergher, Gunther" <Gunther.Pergher@dowjones.com< 12/18/2000 01:03 PM To: undisclosed-recipients:; cc: Subject: DJ California Suit Claims Gas Cos Conspired To Fix Prices, DJ La wmakers Ask Justice Dept To Probe Calif Pwr,Natural Gas 17:45 GMT 18 December 2000 *DJ Class Action Suit Filed In California Vs Natural Gas Cos (MORE) Dow Jones Newswires 18-12-00 1745GMT *DJ California Suit Claims Gas Cos Conspired To Fix Prices (MORE) Dow Jones Newswires 18-12-00 1746GMT*DJ California Suit Names Sempra, El Paso Gas As Defendants (MORE) Dow Jones Newswires 18-12-00 1752GMT Alleges Cos Agreed To Monopolize Mkt LOS ANGELES (Dow Jones)--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. (MORE) Dow Jones Newswires 18-12-00 1832GMT Plaintiffs Seek Billions In Damages 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. -By Jason Leopold; Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com (END) Dow Jones Newswires 18-12-00 2001GMT 20:33 GMT 18 December 2000 DJ Lawmakers Ask Justice Dept To Probe Calif Pwr,Natural Gas WASHINGTON (Dow Jones)--Two California lawmakers have asked the U.S. Department of Justice to investigate "potential collusion" in the state's highly volatile electricity and natural gas markets. The lawmakers - U.S. Sen. Barbara Boxer, D-Calif., and John Burton, president pro tempore of the California State Senate - asked Attorney General Janet Reno to take "immediate steps" to investigate California markets for electricity and natural gas. "We are concerned that market power is being abused by generators in the electricity market to inflate prices and gouge consumers," the letter said. The lawmakers questioned whether repairs or maintenance were truly behind why a quarter of the state's generating plants weren't operating in recent weeks, contributing to the latest power-supply emergency in California. "Some have suggested that one reason for (power) plant shutdowns is that in some cases companies are selling natural gas they would otherwise use to operate their plants at exorbitant prices on the natural gas market," the lawmakers said. "The Department of Justice must act to ensure that collusion and other unlawful acts are not contributing to the crisis in California's power markets," they told Reno. The probe must begin now, despite the pending change in presidential administrations next month, to set "a strong example of leadership for the new attorney general to follow," Boxer and Burton wrote. There was no immediate response from the Justice Department to the letter, which was dated Friday. "I'd be very surprised if the Justice Department found any gaming or violation of the law," said Lynne Church, president of the Electric Power Supply Association, whose members operate deregulated power generation facilities in California. Any DOJ investigation would be on top of probes already under way by the U.S. Federal Energy Regulatory Commission, the state of California and others, she said. "I'm not too nervous about that one," Church said of the prospect of DOJ joining the fray. Neither the California Independent System Operator nor officials in the Pacific Northwest found any evidence of price-gouging in separate investigations they conducted, Church noted. Power prices skyrocketed in California because of the flawed market structure state officials imposed, she said. "There's no doubt those markets went higher than they would have if that structure were not in place," she said. "But the fact that (power producers) made a lot of money doesn't mean they violated the law." By Bryan Lee, Dow Jones Newswires; 202-862-6647; bryan.lee@dowjones.com (END) DOW JONES NEWS 12-18-00 03:33 PM Copyright © 2000, Dow Jones & Company Inc G_nther A. Pergher Senior Analyst Dow Jones & Company Inc. Tel. 609.520.7067 Fax. 609.452.3531 The information transmitted is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient is prohibited. If you received this in error, please contact the sender and delete the material from any computer.
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