8-KOther Events

SEMPRA 8-K Report, Corporate Update (Nov 23, 2005)

Filed November 23, 2005For Securities:SRESREA

Summary

This Form 8-K filing from Sempra Energy (SRE) on November 22, 2005, discloses significant legal action taken against the company and its California utility subsidiaries, Southern California Gas Company and San Diego Gas & Electric Company. The Attorney General of California and the California Public Utilities Commission (CPUC) have filed a lawsuit alleging that Sempra intentionally misled the CPUC in 1998 to gain approval for using utility pipeline capacity for its non-utility subsidiaries to supply natural gas to a power plant in Mexico. The lawsuit claims that this action resulted in insufficient pipeline capacity to serve California customers, leading to natural gas curtailments for electric generators and large commercial/industrial customers during the 2000-2001 period. These curtailments allegedly caused increased air pollution and higher electricity prices for California consumers due to the use of oil as an alternative fuel. The company is facing substantial penalties and potential divestiture of non-utility subsidiaries.

Key Highlights

  • 1Lawsuit filed by California Attorney General and CPUC against Sempra Energy and its California utilities.
  • 2Allegations of intentional misleading of the CPUC in 1998 regarding natural gas pipeline capacity usage.
  • 3Lawsuit stems from Sempra's alleged use of utility pipeline capacity for its non-utility subsidiaries to supply a Mexican power plant.
  • 4Claim of insufficient pipeline capacity for California customers leading to curtailments in 2000-2001.
  • 5Curtailments allegedly impacted electric generators and large commercial/industrial customers.
  • 6Service disruptions reportedly caused increased air pollution and higher electricity prices.
  • 7The suit seeks significant statutory penalties, unspecified damages, and potential divestiture of non-utility subsidiaries.

Frequently Asked Questions

The lawsuit alleges that Sempra Energy and its California utility subsidiaries intentionally misled the California Public Utilities Commission (CPUC) in 1998. This was allegedly to obtain approval for using the utilities' natural gas pipeline capacity to deliver gas to a power plant in Mexico via Sempra's non-utility subsidiaries.

The lawsuit claims that by diverting pipeline capacity, there was insufficient capacity to serve California customers. This resulted in natural gas service curtailments for electric generators and large commercial/industrial customers during 2000-2001, leading to increased air pollution and higher electricity prices for consumers due to the switch to oil as an alternative fuel.

Sempra Energy faces potential penalties including statutory penalties of at least $1 million, $2,500 for each instance of unfair business practices, and unspecified amounts of actual and punitive damages. Additionally, the lawsuit seeks an injunction that could force Sempra Energy to divest its non-utility subsidiaries.

The lawsuit was filed on November 21, 2005, in the San Diego County Superior Court.