The lawsuit stemming from the infamous "meeting in the Phoenix hotel room" came to an end when Sempra and its utility subsidiaries agreed to settle the class-action lawsuit, Continental Forge v. Sempra, January 4. In addition, the companies settled a case similar to Continental Forge that was pending in Nevada. Also settled were allegations against Sempra Energy and Sempra Energy Trading claiming conspiracy to manipulate natural gas prices through misreporting and "wash" trades that inflated action on the wholesale trading markets but made no actual trades. "This wraps up the dangerous litigation that we have arising out of the energy crisis," said Sempra chair Stephen Baum. He added that because the company did not know what a jury would decide in the Continental Forge case, he didn't want to risk a decision going against Sempra. That "would have been fatal to the company. We're not in the business of betting the company." This week's settlements do not, however, resolve two pending lawsuits from the California Attorney General's Office. One, against Sempra Commodities filed November 16, 2005, alleges fraud from energy crisis price manipulation. The other, filed November 21, accuses Sempra Energy, San Diego Gas & Electric, and SoCal Gas of deceiving state regulators about their ability to supply natural gas to customers during the 2000-01 state energy crisis, according to the company. Those cases are "without merit and meant to put pressure on Sempra," Baum asserted. He added that the company expects they will be dismissed with prejudice." Of the total $377 million Sempra will pay, $347 million of the settlement relates to the Continental Forge case and the gas price reporting cases. Nearly half that amount was reported to be attorneys' fees. The Nevada case amounts to $30 million. In addition, Sempra promised to reduce the price it charges the Department of Water Resources for its long-term contracts. The discount is expected to total $300 million over the remaining six-year term of the contract, according to Sempra. The company could, however, elect not to make that discount, and instead make a payment to the Continental Forge settlement fund. In other concessions, Sempra LNG agreed to sell its gas to sister companies SDG&E and SoCal Gas at 2 cents below the border price. The two utilities said they will work to integrate their natural gas facilities. "This settlement will provide significant economic benefits to electric and natural gas consumers in California, both in lower electricity and gas costs and in the structural changes in the natural gas operations," stated California Public Utilities Commission president Mike Peevey. The Continental Forge lawsuit alleged that utility executives met with executives from El Paso in 1996 in an Embassy Suites hotel room near the Phoenix, Arizona, airport. During that meeting, plaintiffs maintained, the executives conspired to manipulate prices. The settlement will not affect earnings, Baum assured financial analysts. "Sempra companies have over $5 billion in cash," he added. Sempra was facing more than $20 billion in fines if the jury decided in favor of plaintiffs in the case. The financial community appeared to welcome the settlement. Standard & Poor's stated that it removed near-term credit risk for the company but did not change Sempra's credit rating.