Energy companies routinely record trade transactions to maintain a record of the deals.
The plaintiffs, including the cities of San Diego, Los Angeles and San Francisco, allege that traders from Sempra and other companies routinely misrepresented the price of natural gas trades and engaged in bogus trading in an effort to rig prices during the crisis.
Nanci Nishimura, a partner with the Cotchett, Pitre, Simon & McCarthy law firm, which is representing the plaintiffs, said the energy companies face a potential judgment of up to $1 billion because of state law allowing a trebling of damages in such cases.
The plaintiffs expect to hear conversations similar to those recorded by electricity traders during the crisis, Nishimura said. The expectation is based on what plaintiffs have heard from the limited release of recordings in a related case, she said.
The electricity recordings caused public outrage when they revealed traders speaking with apparent glee of gouging California. One now-infamous recording captured an Enron trader speaking of ripping off “Grandma Millie,” a nickname he assigned to state utility consumers.
“Grandma Millie will blush when she hears these (natural gas) tapes,” Nishimura said.
Doug Kline, a Sempra spokesman, said the company was involved in none of the trades or trading practices under challenge by the plaintiffs in the case.
“Our position is that the lawsuit recycles energy-crisis allegations that were already resolved by the Federal Energy Regulatory Commission and that the allegations are false and greatly exaggerated as they relate to our company,” Kline said.
He added that the company had taken the same position in sworn testimony to federal regulators.
The Sempra utilities subject to the order in the case are San Diego Gas & Electric Co. and Southern California Gas Co.
Other defendants facing the order to surrender tapes include Duke Energy, Reliant Energy, Williams Cos., Aquila and Coral Energy.
Skyrocketing natural prices accompanied the run-up in electricity prices during the 2000-01 crisis. While high electricity costs captured most of the attention during the crisis, rising natural gas prices also contributed because most electricity in the state is generated by burning natural gas.
Just two months ago, Prager presided over the settlement of a major class-action lawsuit alleging that Sempra subsidiaries conspired with El Paso Natural Gas to restrict natural gas supplies to the region during the crisis.
That settlement will result in cash payments of $325 million to millions of Southern California utility customers, as well as possible future discounts in energy costs.
