Six more water districts join lawsuit against power producers

Six additional San Diego County water districts have joined the lawsuit against 13 power producers seeking damages for unjust and unreasonable electricity prices.

Judge rules case must be heard in state court

SAN DIEGO, Calif., Aug. 3, 2001 — Six additional San Diego County water districts have joined the lawsuit against 13 power producers seeking damages for unjust and unreasonable electricity prices.

In an amended complaint filed yesterday in San Diego Superior Court, Ramona Municipal Water District, Helix Water District, Vista Irrigation District, Yuima Municipal Water District, Fallbrook Public Utility District and Borrego Water District were added to the action, bringing the number of water district plaintiffs to nine.

The original complaint was filed in January by Padre Dam Municipal Water District, the Sweetwater Authority and the Valley Center Municipal Water District. The districts contend that power producers, including Enron, Sempra and Duke Energy, have engaged in unlawful, unfair and anti-competitive acts and practices including withholding power for the purpose of creating an artificial shortage of electricity that has resulted in unjust and unreasonable prices for power.

"These districts have paid more than $10 million above what they rightfully owe to power producers," stated Mike Cowett, a partner with Best Best & Krieger, the law firm representing the water districts.

Large commercial users of electricity in San Diego County were not covered in legislation approved last summer which applied rate caps to SDG&E residential customers. Rate caps were not applied to large commercial users until March 2001.

"These large commercial energy users including the water districts are the only users in the state that paid full freight for their power until March 2001. Their overpayments total in excess of $1 billion dollars and they deserve to be compensated for their overpayments," stated Jim Gilpin, a partner with Best Best & Krieger. "The interests of the large commercial users have been ignored and overlooked by the state and legislators throughout the rebate proceedings."

In related news, United States District Judge Robert H. Whaley ruled July 31, 2001 that lawsuits filed against power suppliers must be heard in California state court. Attorneys for the power producers had argued that the lawsuits be moved to federal court as the producers are governed by the Federal Power Act. The lawsuits, including the one filed by the water districts, are based on California state law and seek remedies not available under federal law.

"The judge's ruling that the law suits belong in state court is a major victory for our clients and all plaintiffs in suits against power providers," stated Cowett.

The nine water districts serve over 500,000 people in San Diego County.

More in Energy Management