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City Of Long Beach Files Suit Against Natural Gas Providers

Long Beach City Attorney Robert Shannon today sued Southern California Gas Co., San Diego Gas & Electric, their parent Sempra Energy, El Paso Corporation and various subsidiaries.  The lawsuit, filed on behalf of the City and as a class action on behalf of the residents and businesses of Long Beach, charges these companies with conspiring to manipulate the supply of natural gas, resulting in huge price increases to residents and businesses in the City of Long Beach.

"The primary focus of this lawsuit is to recover and return to the City's residents and businesses the grossly inflated rates paid for natural gas," Shannon said.  "In just the three month period from November 2000 - February 2001, those damages exceeded 28 million dollars.  We will also seek to prevent any such future illegal activity."

The City of Long Beach Gas Company has for years purchased natural gas at the California/Arizona border.  The price of that gas has increased 400-500% in the last several months.  The lawsuit contends that this run up in price is the direct result of a conspiracy among the defendants.  The essence of the conspiracy, as alleged, is that these powerful energy companies have agreed not to compete with one another; and in particular, not to build pipelines which would have brought more and cheaper natural gas into Southern California.  The lawsuit contends that Long Beach would be paying far less for gas had the defendants not engaged in this illegal activity.

"The people of Long Beach are being gouged by energy conglomerates who are artificially manipulating the supply of natural gas and reaping excessive profits at the expense of the poor, the elderly, people on fixed incomes and local businesses."  Shannon added, "We are turning to the courts for justice because the free market has failed."

The lawsuit alleges California antitrust violations and unfair business practices.  If successful on its antitrust claims, the City would be entitled to triple its damages, in addition to attorneys' fees.

The City Attorney's office has received the approval of the Los Angeles District Attorney to allege a separate claim for violations of the State consumer protection law prohibiting unfair business practices.  If successful on this claim, the City and the State would be entitled to substantial civil penalties and an order preventing the illegal conduct.

After a request from the City Attorney, authority to file the lawsuit was given by unanimous vote of the Long Beach City Council on March 6, 2001.

Named in the suit are: Southern California Gas Company, San Diego Gas & Electric, Sempra Energy, El Paso Natural Gas Company, El Paso Corporation, El Paso Tennessee Pipeline Company, El Paso Merchant Energy Company

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