Friday, January 11, 2002
County Sues Energy Companies, Claims ‘Massive Conspiracy’ to Fix Prices
From Staff and Wire Service Reports
Los Angeles County has sued several of the region’s most prominent energy companies, alleging it has been victimized by a “massive conspiracy” to boost gas and electricity in the wake of energy deregulation.
In a complaint dated Jan. 8, county lawyers allege that the companies worked to “eliminate competition in the newly deregulated energy industry and to raise the price of both natural gas and electricity in Southern California.”
The 45-page complaint included a copy of what county lawyers said is an agenda and notes from a Sept. 25, 1996 meeting of executives of Southern California Gas, San Diego Gas & Electric and El Paso Natural Gas at an Embassy Suites hotel in Phoenix. At that meeting, the county alleges, the executives “agreed not to compete against each other in the Southern California and Baja California natural gas delivery markets.”
The suit also alleges that the companies “conspired to prevent other pipelines from being built that would have competed against them and lowered natural gas prices in these markets. In sum, the conspirators sought to eliminate competition, drive up the price of natural gas and electricity, profit from the increased prices, and position themselves to take advantage of deregulation of electricity.”
The exhibit allegedly details plans to end competition on a gas pipeline project and suggests the formation of an “alliance” to distribute gas in northern Mexico. Notes refer to pursuing “opportunities resulting from electric industry restructuring.”
Representatives of the defendants could not be reached for comment. Attorney Lillian Sallinger of the County Counsel’s Office also was unavailable for comment.
To handle the suit, the county retained the Los Angeles law firm of Blecher & Collins and Washington, D.C. attorney Jonathan W. Cuneo.
The county asserted that the behavior of the companies in the wake of the meeting gives evidence of collusive arrangements reached between the companies. The Gas Co., for example, was the only company to bid on a gas pipeline to northern Baja, while El Paso Natural Gas was the only bidder on a pipeline in Samalayuca, Mexico. Other projects that had been in the works before the meeting were allegedly killed to reduce competition.
The results of the arrangements, the suit contends has been “devastating” for Southern California gas consumers, with skyrocketing prices and scarce supplies.
The county seeks unspecified general and specific damages as well as an injunction blocking the alleged anti-competitive behavior.
Copyright 2002, Metropolitan News Company