CPUC alleges price rigging by SoCalGas

San Diego Business Journal, Nov 22, 2004 by Pat Broderick

Southern California Gas Co. "knowingly manipulated the gas market and exerted market power through its loan program and other activities" during the state's energy crunch of 2000-01.

That is the finding in the initial phase of the California Public Utilities Commission's investigation into what caused the increased gas prices at the California border.

"SoCalGas understood clearly during the summer and fall of 2000 that actions it took that increased winter reliance on flowing gas and decreased the availability of stored gas would contribute to market constrains and put upward pressure on border prices," according to the proposed decision that would make SoCalGas, a Sempra Energy utility, liable for a $28.8 million refund, plus interest, to core gas customers.

On Dec. 16, the full PUC board is scheduled to consider these findings, which also have been referred to the state's attorney general, who is investigating the activities of Sempra and its subsidiaries during the energy crisis.

In a prepared statement, William L. Reed, the senior vice president of regulatory and strategic planning for SoCalGas, termed the proposed decision "flawed," and said that he expected it to be rejected by the full commission.

"The spike in natural gas costs during the winter of 2000-2001 was caused by extraordinary market factors that tightened supply and demand, including unprecedented electric generation demand, significantly colder-than-normal weather, and supply reductions due to an explosion in a key interstate pipeline," he said. "During that time, SoCalGas provided service with no interruptions in supply and saved more than $200 million in gas costs for the customers for whom we purchase gas."