Tuesday, Nov. 2, 2004
Trey Davis, University of Californaia (510) 987-0056
Nanci Nishimura, Cotchett, Pitre, Simon & McCarthy (650) 697-6000


The University of California filed a lawsuit yesterday (Nov. 1) against a number of major natural gas providers for manipulating retail natural gas prices during California's energy crisis in 2000-2001.

In the lawsuit filed in Alameda County Superior Court, the university claims that the energy companies -- primarily producers, marketers, traders, transporters, distributors and sellers of retail natural gas -- engaged in "unfair and deceptive conduct (that) caused California gas retail prices to escalate to about six times the national average."

The companies and their subsidies include among others Dynegy, Reliant Energy, CenterPoint Energy, Coral Energy, WD Energy, Encana Corp., Aquila Inc., CMS Energy, Cantera Gas Co., and Mary Kathleen Zanaboni, a Long Beach, CA-based trader for Reliant Resources.

"The university and other California consumers should not bear the costs of unlawful price gouging of these energy providers," said James E. Holst, UC's general counsel.

The 10-campus UC system maintains approximately 2,500 buildings across the state.

"This legal action sends a clear signal to gas providers that they will have to answer for the manipulation of natural gas prices," said Joseph W. Cotchett of Cotchett, Pitre, Simon & McCarthy, which filed the suit on the university's behalf.

The law firm has filed similar suits on behalf of the counties of Alameda, San Diego, San Francisco and Santa Clara, as well as the School Project for Utility Rate Reduction and the Nurserymen's Exchange of Half Moon Bay.

The UC lawsuit claims that the gas providers artificially inflated natural gas retail prices by reporting false sales to the publishers of the industry's natural gas price indices. As a result, the indices published false information, which in turn drove up prices.

The gas providers also engaged in "wash trades," sham transactions that involve the simultaneous purchase and sale of the same amount of natural gas for the same price to both companies to create the illusion of high demand and increased prices, the suit alleges.

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