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Firing the first legal salvo in California’s energy crisis, San Francisco City Attorney Louise Renne last Thursday sued 13 energy producers for allegedly creating artificially short supplies to keep prices high. “While the energy companies want Californians to believe that the crisis is a result of market forces, the power shortage and high prices are in fact due to the illegal manipulation of the market by the energy producers themselves,” Renne told a City Hall news conference. “By their anticompetitive conduct, the energy companies have dangerously destabilized California’s economy,” she added. “California consumers and taxpayers deserve better.” Renne’s lawsuit, People v. Dynegy et al., 318189, was filed in San Francisco Superior Court and asks for an injunction to stop the alleged anticompetitive behavior and to refund an estimated $1 billion in illegal profits. The litigation is based on the state’s Business and Profession Code Section 17200, which bans unfair business practices. Named as defendants are Dynegy Power Marketing Inc., Enron Energy Services Inc., Enron Power Marketing Inc., PG&E Energy Trading Holding Corp., Reliant Energy Services Inc., all of Houston, Tex., Sempra Energy Trading Corp. of Stamford, Conn., Sempra Energy Resources of San Diego, Southern Company Energy Marketing of Atlanta, Williams Energy Marketing and Trading Co. of Tulsa, Okla., Duke Energy Trading and Marketing, a Delaware corporation, Morgan Stanley Capital Group Inc., N.Y., and NRG Energy Inc., of Minneapolis, Minn. Renne filed the lawsuit on a day that saw the state order a second round of rolling blackouts because of a shortage of available energy on the open market. According to the Associated Press, the outages started mid-morning in Northern California and rolled to the Oregon border. The outages affected an estimated 1 million customers for at least an hour into the early afternoon. Asked if other cities would like to join the litigation, Renne replied, “I don’t think there is a public agency in the state that isn’t interested in this matter.” None has yet signed on, however. The city attorney said her major concern was for older Californians, whom she said “are fearful” when they learn that their energy will be shut off. “People are afraid and it’s just not right,” she said. In a prepared statement released by his office, Sa Francisco Mayor Willie Brown said he supports the lawsuit as a way to find a remedy for an increasingly intolerable situation. “These energy producers are engaging in unfair business practices by artificially holding down supply to drive up prices,” the mayor said. “The city of San Francisco must take action.” The complaint echoed California Gov. Gray Davis’ assertion that “deregulation is a failed experiment” that has not led to lower energy prices or a reliable source of power. It alleged that the energy producers manipulated the power supply by withholding energy from the open market and then colluded to drive up the opening bid that all purchasers would have to pay. As a result, the state “was forced to make large amounts of real-time purchases of wholesale energy on the spot market at ever-increasing prices to meet California’s energy demand,” the lawsuit said. Joining the lawsuit as co-counsel is attorney Patrick Coughlin of Milberg Weiss Bershad Hynes & Lerach in San Francisco. Coughlin worked with the city in its successful litigation against the tobacco industry.

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