Sempra named in price-spike investigation

San Diego Union Tribune ^ | February 26, 2004 | Craig D. Rose

[calcowgirl]

Sempra Energy yesterday disclosed that federal investigators are probing the company regarding the spike in natural gas prices last year that sent costs soaring more than 45 percent from Thanksgiving to mid-December.

The disclosure came on the same day that the Williams Cos. announced that it agreed to forgo $140 million to settle allegations of market-rigging during the state's electricity crisis of 2000-01.

San Diego-based Sempra said that it has been subpoenaed by the Commodity Futures Trading Commission in an investigation of higher natural gas prices. The increases have raised home heating costs and led some major industrial users of natural gas to seek an inquiry.

Sempra revealed the CFTC subpoena in a filing with the Securities and Exchange Commission, saying also that it is cooperating. Jennifer Andrews, a Sempra spokeswoman, said the company believed the subpoena was part of a broader industry investigation.

"We don't believe we are a specific target of the probe," Andrews said.

Through its Southern California Gas and San Diego Gas & Electric subsidiaries, Sempra has 6.1 million natural gas customers. In addition, a Sempra subsidiary in Connecticut is a trader of the commodity.

A CFTC spokesman declined to comment on the Sempra subpoena, citing a policy to neither confirm nor deny the existence of investigations.

Earlier this year, the commission announced settlements totaling $50 million with six companies over gas price reporting violations. The companies were alleged to have used false price reports or phony trades in an attempt to manipulate the market for natural gas.

Earlier El Paso Corp. agreed to a $1.7 billion settlement to resolve allegations that it manipulated gas supplies to California during the crisis.

Federal investigators have found that traders reported bogus natural gas prices during California's electricity crisis, when higher gas prices were used to justify inflated electricity prices. Power plants burn natural gas to produce electricity.

Sempra conceded some discrepancies in its reporting during the crisis but characterized them as minor in reports to the Federal Energy Regulatory Commission.

The deal announced yesterday between Tulsa-based Williams, Pacific Gas and Electric Co. and Southern California Edison Co. could resolve the Oklahoma company's exposure to refunds related to the state's electricity crisis.

Under the agreement, Williams will reduce by $140 million the amount it is owed by the utilities. That debt totaled $230 million before yesterday's announcement.

The company admitted no wrongdoing under the settlement.

"The big thing is it provides certainty as to our power operations," said Brad Church, a spokesman for Williams. If municipalities and cooperatives join the settlement, Williams will be free of its liability in the Western energy crisis, he said.

But the settlement amount will be reduced if municipalities and cooperatives don't join in the settlement, Church said. And the deal must also be approved by federal and state regulators and the U.S. Bankruptcy Court overseeing PG&E's reorganization.

Williams in 2002 agreed to a settlement valued at $417 million over allegations of market rigging during the electricity crisis brought by officials of California, Oregon and Washington. The company also trimmed $1.2 billion from the cost of its long-term electric supply contracts with California.

In 2001, Williams and AES Corp. also paid an $8 million fine to the Federal Energy Regulatory Commission related to an allegation that they shuttered a generating plant during the crisis to drive up prices.

FERC ordered a dozen companies last year to provide $3.3 billion in refunds, but California has asked for an additional $6 billion. Williams was not named in FERC's order.

Bankrupt PG&E said its debt to Williams would be cut by $75 million. Edison did not provide a figure, but is believed to be in line for most of the remaining $65 million in debt relief. The companies said the reductions would lead to savings for their millions of customers.

"This settlement brings us another step closer in closing the book on California's energy crisis," said Roger J. Peters, PG&E's senior vice president and general counsel. "We are pleased to be able to reach an agreement with the Williams Cos. that is fair to the company and is in the best interests of our customers."

[calcowgirl]

ping

[Amerigomag]

Here's what really irritates me about these settlements.

The rate payer is never reimbursed. The state gets the money to offset the debt that resulted from its very bad decisions.

[Orange1998]

You can the SEC settlements too.

[calcowgirl]

Here's what really irritates me about these settlements.
The rate payer is never reimbursed. The state gets the money to offset the debt that resulted from its very bad decisions.

Yep. And I bet the settlements read something like this:

Without admitting or denying guilt, the party agrees to disgorge [some of] the profits made from the transaction (read: scam).

Then the parties are free to go play the next round. They'll be back!

[Ernest_at_the_Beach]

Thanks.

[Ernest_at_the_Beach]

The deal announced yesterday between Tulsa-based Williams, Pacific Gas and Electric Co. and Southern California Edison Co. could resolve the Oklahoma company's exposure to refunds related to the state's electricity crisis.

What deal was that?

[Ernest_at_the_Beach]

Williams and California Utilities Reach Agreement on Settlement Terms

 WEDNESDAY, FEBRUARY 25, 2004 8:31 AM
 - PR Newswire

WMB
9.38	+0.17

    Enter Symbol:

    Enter Keyword:

TULSA, Okla., Feb 25, 2004 /PRNewswire-FirstCall via COMTEX/ -- Williams (WMB) today announced it has reached agreement on terms to settle with two California utilities resolving outstanding disputes, including refund liability, related to natural gas and power markets in 2000 and 2001.

The expected earnings impact of the settlement with Pacific Gas and Electric Company and Southern California Edison Company was reflected in Williams' fourth-quarter 2003 financial results.

Upon the filing of definitive agreements, the settlement will be subject to approval by the Federal Energy Regulatory Commission, the California Public Utilities Commission and U.S. Bankruptcy Court (PG&E).

About Williams

Williams, through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. Williams' gas wells, pipelines and midstream facilities are concentrated in the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard. More information is available at www.williams.com .

Portions of this document may constitute "forward-looking statements" as defined by federal law. Although the company believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Any such statements are made in reliance on the "safe harbor" protections provided under the Private Securities Reform Act of 1995. Additional information about issues that could lead to material changes in performance is contained in the company's annual reports filed with the Securities and Exchange Commission.

SOURCE Williams

media relations, Brad Church, +1-918-573-3332, or investor
relations, Travis Campbell, +1-918-573-2944, or Courtney Baugher,
+1-918-573-5768, all of Williams

http://www.williams.com

[calcowgirl]

Power seller settles with PG&E, Edison
By Dale Kasler -- Bee Staff Writer
Published 2:15 a.m. PST Thursday, February 26, 2004

Electricity generator Williams Cos. Inc., resolving claims that it overcharged California utilities during the energy crisis, agreed to a $140 million settlement Wednesday.
The agreement with Pacific Gas and Electric Co. and Southern California Edison is one of the biggest settlements to come out of the energy crisis. The dollars will be used to hold down customer rates, although details are unclear, officials with both utilities said.

By agreeing to the settlement, Oklahoma-based Williams has resolved most of the company's remaining refund claims from the energy crisis, Williams spokesman Brad Church said.

The agreement is in addition to a $417 million settlement Williams reached in 2002 with the state governments of California, Washington and Oregon.

"We're looking to get issues like this behind us," Church said, adding that Williams isn't admitting any wrongdoing.

The largest settlement so far has been a $1.7 billion payment by El Paso Corp., which was accused of manipulating the price of natural gas used to fuel many of California's power plants.

But state officials and utility executives are still pursuing more than $8 billion in refunds from other power sellers through a refund proceeding overseen by the Federal Energy Regulatory Commission.

The FERC is soon expected to finalize refunds totaling about $2.5 billion, said Erik Saltmarsh of the California Electricity Oversight Board. The FERC has rejected about $5.7 billion in additional refunds - a decision challenged in court by the state.

State officials argue that the power sellers, who supplied electricity on a daily basis to PG&E, Edison and other utilities, illegally withheld electricity and manipulated the state's deregulated energy markets during a frenzy of activity in 2000 and 2001. The run-up in prices drove PG&E to seek bankruptcy protection and nearly did the same to Edison, forcing state government to step in and buy electricity on their behalf.

PG&E said its share of the Williams settlement is $75 million, a sum that will be deducted from the amount PG&E owes the Oklahoma company for power purchases.

Edison said it will get an actual refund. It wouldn't say how much it's due, but Church said the Southern California utility is due the lion's share of the balance of the $140 million. The rest will be split between San Diego Gas & Electric and a few municipal utilities, although those settlements haven't been finalized, Church said.

PG&E and Edison said the dollars would be returned to customers via lowered utility bills, although the details haven't been worked out with the state Public Utilities Commission.

"This is the customers' money," said Edison spokesman Gil Alexander.

http://www.sacbee.com/content/business/story/8339004p-9268921c.html

[cartoonistx]

The "manipulations" of energy prices are, for the most part, legal pricing agreements that benefit the owners of the gas/electricity but make the buyers of said energy mad after the fact. If the angered party is big enough (a state for instance) the cost to an energy company of defending itself in any lawsuit can be more than it's worth, thus a settlement makes more business sense. Don't assume these companies have really done anything illegal when they pay off the plaintiffs. Besides, they're just gonna pass the cost of the suits along to the ratepayers....trust me!

[lewislynn]

There was no price gouging. The reason for the overnight rise in electricity prices and rolling blackouts in the middle of winter was because someone said one day that California didn't have enough power plants...though we suddenly did have enough power plants and never another "rolling blackout", even through the following summer, when prices were satisfactory to the new owners of the plants and lawsuits and investigations were started.< /sarcasm >

No price gouging? HA...

Vindicated once again.

[lewislynn]

The rate payer is never reimbursed.

Sure you'll be reimbursed, through lower rates. Haven't you noticed the recent spike in rates?. That's to cover the coming reduction to pacify you untill the next gouging go round.

Remember that big tax rebate/cut you got? Guess which industry sucked/is sucking that right out of your pocket.

[calcowgirl]

Don't assume these companies have really done anything illegal when they pay off the plaintiffs.

I'm all too familiar with large corporate lawsuits and understand that cost/benefit/risk is fundamental in the settle vs. fight decision. So I don't assume that a settlement implies guilt. But... in California's case, I believe there are some guilty parties... and I'd like to see them busted. Unfortunately, it doesn't look like it is going to happen.

Besides, they're just gonna pass the cost of the suits along to the ratepayers....trust me!

And if the state agressively pursued it, it comes out of our taxes!
Dang... my pockets are empty again! LOL.