Sempra Energy power contract found valid and enforceable by state court
SAN DIEGO, May 20, 2003 - Sempra Energy officials today announced that a San Diego Superior Court has ruled that the energy contract Sempra Energy Resources signed in 2001 with the California Department of Water Resources (CDWR) is valid and enforceable. The 10-year contract provides the state with up to 1,900 megawatts (MW) of electricity.
In its summary judgment ruling the court rejected the CDWR’s claims that the company had misled it in entering into the agreement and had not met contractual obligations. The court concluded that under the agreement the CDWR is obligated to take and pay for power provided by the company from any source.
“The Court finds the disputed terms of the subject contract are clear, unambiguous and not susceptible to multiple meanings,” said the decision by Judge Wayne L. Peterson of the Superior Court of California, County of San Diego. “The contract cannot reasonably be interpreted the way DWR has elected to interpret it.” The state will have 60 days from the entry of the final judgment to appeal the decision.
“We are very pleased with today’s ruling and the court’s confirmation that the contract provides the flexibility to supply power from either company power plants, the marketplace or any combination of sources,” said Donald E. Felsinger, group president, Sempra Energy Global Enterprises, the umbrella for Sempra Energy’s growth businesses. “Our contract helped stabilize the market during a very volatile period.”
In its efforts to meet the growing power needs of the Pacific Southwest, Sempra Energy Resources has invested more than $1 billion in building new, state-of-the-art power plant projects. Three of the company’s new plants will be commercially operational in the next few weeks, helping meet this summer’s peak electric demands by providing more than 1,500 MW to the region. An additional 625 MW will be operational by the end of the year.
All of the plants are fueled by natural gas and have been designed to meet California’s tough air emissions standards.
The state has also challenged the Sempra Energy Resources contract and six others in a separate Federal Energy Regulatory Commission proceeding. Oral arguments were held on May 15, 2003, and a decision is expected in the near future.
Sempra Energy (NYSE: SRE), based in San Diego, is a Fortune 500 energy services holding company with 2002 revenues of $6 billion. The Sempra Energy companies’ 12,000 employees serve more than 9 million customers in the United States, Europe, Canada, Mexico, South America and Asia.
EDITOR’S NOTE: A copy of the decision can be found at www.sempra.com/SERv.PDF.
Sempra Energy Resources is not the same company as the utilities SDG&E/SoCalGas, and is not regulated by the California Public Utilities Commission.
