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Brown Announces Huge Rebate to California Consumers Who Were Victims of the 2000-2001 Energy Crisis

Wednesday, April 28, 2010
Contact: (415) 703-5837

SAN DIEGO — Attorney General Edmund G. Brown Jr. today announced settlements that will bring $400 million in refunds for California consumers who were victimized by market manipulation and exorbitant prices during the energy crisis of 2000-2001.

The two-part agreement with San Diego-based Sempra Energy will provide reimbursement of $270 million to California utility customers who each month pay off debt from the utility crisis on their gas and electric bills. Sempra will also pay $130 million to consumers to settle separate claims by the state Public Utilities Commission and the Department of Water Resources.

“The settlements,” Brown said, “will put hundreds of millions of dollars back into the pockets of California energy consumers who suffered blackouts and great economic harm during the energy crisis.”

Including the prior settlement of a class-action suit, Sempra has now paid more than $700 million for the benefit of state utility customers.

During the energy crisis, Enron, Sempra and other energy companies created phony energy shortages, blackouts and record high energy prices. As a result, California’s two largest utilities, PG&E and Southern California Edison, became insolvent, forcing the state to spend billions of dollars for huge amounts of emergency power to keep the lights on.

In legal documents, Sempra was accused of “Enron-style gaming” of the energy markets and “a pervasive pattern of market manipulation and abuse.” It was accused of entering “Enron-style partnerships” that had a destructive impact on the market, driving prices higher and reducing energy availability and reliability. It was accused of a variety of other exotic schemes called “False Import, Paper Trading and Circular Scheduling” to short-circuit the proper functioning of energy markets.

Customers of PG&E, Southern California Edison and San Diego Gas and Electric (a subsidiary of Sempra) continue to pay for the energy crisis in a line item on their utility bills labeled “DWR bond charge.” Funds received in the settlements will go toward reducing those costs to ratepayers.

For the past nine years, the Attorney General has investigated, litigated and negotiated with Sempra and other energy sellers whose misconduct caused the energy crisis.

The Sempra settlement is the latest of 39 settlements hammered out by the Attorney General, in co-operation with the Public Utilities Commission, Department of Water Resources, PG&E, and Southern California Edison, that will provide more than $3 billion in ratepayer relief. The Attorney General continues to press California’s claims for compensation to ratepayers for overpriced energy sold to the state.

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