Power settlement could save ratepayers money

NEVADA - Natural gas and electric power customers will get a break on rates if a state district judge approves a $30 million lawsuit settlement agreement.

State District Judge Kathy Hardcastle in September will consider approving the agreement reached by San Diego-based Sempra Energy and the Nevada attorney general's Bureau of Consumer Protection.

The lawsuit stems from allegations of natural gas market manipulations during the Western energy crisis of 2000 and 2001. Sempra denied the allegations but decided to settle the lawsuit for $30 million in May.

"This has been a long-standing case, and the company simply decided to put the issue behind us and focus on our business," said Doug Kline, a Sempra spokesman.

Some feared a court victory for the plaintiffs might total $23 million and would bankrupt Sempra, a utility holding company.

Under the agreement, Sempra can make payments to Nevada over eight years or make an immediate payment, said Eric Witkoski, state consumer advocate and chief of the Bureau of Consumer Protection.

Some settlement payments will be distributed to customers of Southwest Gas Corp. and Nevada Power Co. as a credit on bills.

The credit would be arranged through adjustments in the utilities' next energy rate cases. The next Southwest Gas adjustment may be effective by winter, but Witkoski anticipates the credit will not be applied to Nevada Power bills until next summer when the electric company's next energy rate case becomes effective.

Also benefiting would be customers of Valley Electric Association, a cooperative serving Pahrump; Boulder City's electric utility; and Overton Power District.

"Every little bit helps," Witkoski said, noting recent utility rate increases. "Hopefully, (the settlement) discourages any kind of improper behavior in the wholesale market in the future."

The lawsuit was filed as a class action and state officials decided it would be inappropriate to use the money for any purpose but to benefit customers, Witkoski said.

Tim Hay, one of Witkoski's predecessors as consumer advocate, filed the lawsuit against Sempra and El Paso Natural Gas Corp. in November 2002. He accused Sempra and El Paso of participating in a scheme to manipulate natural gas markets by failing to build a new natural gas pipeline, thus restricting gas supplies.

In January, Sempra ended a trial in San Diego when the energy company agreed to settle with California plaintiffs. Sempra also reached a settlement with Nevada.

A California Superior Court judge approved California's part of the $570 million settlement in June.

El Paso earlier reached a settlement with Nevada for $36 million in the same lawsuit.