California is once again gearing up for a fight with natural gas companies Duke Energy, CMS energy and American Electric power, among others, who are facing anti trust lawsuits by consumers for practices that go back a decade, when California was in the midst of a financial crisis mostly brought on by the price fixing.
The claims brought by the suit had been previously thrown out by a lower court, but were reversed by the Court of Appeals in San Francisco.
During that crisis, the energy companies, which included the now defunct Enron, were colluding to hike prices more than ten fold its true market value, and caused not only a deficit which still hamstrings California to this day, but rolling blackouts and the bankruptcy of two of California's largest utilities.
At the basis of the suit are allegations that energy companies manipulated prices by reporting false data to trade publications, who in turn used that data to calculate price indeces that became the source of contractual fees scales. A fact documented by the famous documentary on Enron showed how these companies were also hiking prices and inflating the prices by using mark to market valuations and by speculation that fueled even higher prices.
Another practice that was indicated in the suit as a factor in price fixing was the use of offset trades, trades that offset others to create the impression of more numerous trades and consequently greater demand.
Some companies have already been indicted, such as Enron, and pled guilty to the charges and paid more than 10 billion dollars in related suits.
However the case has been re-opened not on the basis of the merits of the suit, but on the technical point that the suit was not in violation of federal law, which has disappointed some of the Plaintiffs.
Partial Source: Bloomberg 4.11.13
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