California Attorney General Bill Lockyer has filed a lawsuit against Sempra Energy Trading, alleging that the company committed a large-scale fraud during the so-called energy crisis of 2000 and 2001 by manipulating wholesale electricity prices “through widespread playing of Enron games.”
“Sempra ranks as one of the worst of the bad actors who ripped off businesses and consumers during the Energy Crisis,” said Lockyer in a vitriolic press release announcing the lawsuit. “Its gaming of the electricity market was widespread and egregious, and it inflicted severe financial pain on ratepayers.” He added that Sempra proved itself to be “one of the most expert practitioners of the Enron ethic: rake in the dough, let California burn, and send Grandma Millie to the poorhouse.”
The complaint notes that Sempra’s “rampant use of Enron games” violated California laws prohibiting commodities fraud and unfair business practices. Lockyer is seeking “hundreds of millions of dollars,” according to the press release.
Doug Kline, a spokesman for Sempra Energy, told the Associated Press that the lawsuit is a “shameless and unethical attempt” to pressure Sempra to settle a separate, $23 billion lawsuit filed in San Diego by a number of energy consumers. “The timing of this action is appalling and irresponsible given the class-action trial under way in San Diego,” Kline told the wire service.
Lockyer responded that there was no connection between the two cases and that Sempra was attempting to “cloud the issue,” according to the AP.
Lockyer insisted that Sempra submitted false schedules to the California Independent System Operator (Cal-ISO) to create the illusion of congestion, then got paid to relieve the phony congestion. He referred to colorfully named schemes such as Death Star and Get Shorty, whereby the company reportedly was to have been paid by Cal-ISO to keep capacity in reserve and provide that capacity in case Cal-ISO needed electricity. But Sempra never provided the power, and never intended to provide it, the complaint argues.
“This is a close second to Enron,” Lockyer told the AP, referring to the infamous energy company that used imaginatively named maneuvers such as Death Star and Fat Boy to boost electricity prices. “I suggest this is Enron’s twin brother in terms of the extent they ripped off California consumers.”
