Edison, Sempra Subsidiaries Duke It Out in Gas Probe

Sempra subsidiaries drove up natural gas prices at the California border during the energy crisis, Southern California Edison asserted in a California Public Utilities Commission investigation. Underscoring the utilities' sparring over gas issues, Sempra was ordered last month to assign 15 attorneys to oversee Edison's subpoena requests. A number of documents and interactions in the case are being kept under wraps. Sempra maintains it is not part of the proceeding and doesn't need to turn over e-mails requested by Edison. Administrative law judges have rebuffed Sempra's arguments, saying that the CPUC has the right to review parent and subsidiary behavior as part of the price-spike probe. Edison charges that Sempra subsidiary SoCal Gas manipulated prices by loaning gas to noncore customers in the summer of 2000. Edison claims this action helped drive up prices later in the year. While the gas utility acknowledged it loaned out 9 bcf of gas, noncore customers repaid those gas loans in December with fees that helped reduce gas costs, according to Bill Reed, SoCal Gas senior vice president. "Edison is pointing in the wrong direction," said Reed, noting that SoCal Gas had healthy storage levels of 85 percent going into the winter—higher than many utilities in other parts of the country. He said that noncore customers were the ones with almost no gas because they put very little in storage. In the gas market, "noncore customers" refers to industrial and other large customers that secure their own gas supplies. Low hydro supplies, higher than usual demand, and a colder-than-normal winter contributed to high demand that year, he added. Edison's charge that SoCal engaged in hedge gas transactions for profit is a "red herring," Reed said. The commission wants the utility to hedge against gas costs to protect customers, and these transactions did not push up costs, he stressed. Further, Reed said Edison has insisted on the right to engage in hedges in a number of cases. Edison did not return requests for comment. After examining Sempra companies, the probe will scrutinize utility affiliate transactions of Pacific Gas & Electric, Edison, and Southwest Gas.

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Edison, Sempra Subsidiaries Duke It Out in Gas Probe

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