NEWS FROM THE CITY ATTORNEY'S OFFICE
FOR IMMEDIATE RELEASE

March 11, 2002

OAKLAND TO JOIN SAN FRANCISCO IN ENERGY CONSPIRACY LAWSUIT

Oakland, CA-Oakland City Attorney John Russo announced that the City of Oakland has joined the City and County of San Francisco in a class action lawsuit filed Friday against independent energy providers under California's antitrust and unfair competition laws (Business & Professions Code §§17200).

The lawsuit, filed in San Diego County Superior Court, alleges that 13 electricity generating and/or trading companies manipulated and distorted California's deregulated wholesale electricity market, conspired to withhold supply from the market, and colluded to fix electricity prices. These unfair and unlawful business practices resulted in widespread electricity shortages and astronomical prices, destabilizing the California economy and resulting in damages well in excess of $1 billion.

The lawsuit contends that "California's deregulation plan envisioned that . . . competitive market forces would attract new sources of power and lower the price of electricity. Instead, as we have all witnessed, it created the opportunity for a limited group of inside players to manipulate supply and price levels in California to extract unconscionable profits . . . Defendants were free to create artificial energy shortages and fix astronomically high prices in the market, which, of course, is exactly what they did."

"The facts are clear; the fix was in," said Russo. "Greed and manipulation corrupted California's electricity market, costing our residents and businesses billions of dollars and threatening the stability of our state economy. The ill-gotten profits stolen from California ratepayers must be returned. Oakland is proud to join San Francisco in this fight to protect our people and business communities from unscrupulous corporate operators."

Records show that during the summer of 2000, the defendants withheld electricity from the market by shutting down fully operational generation power plants and ordering plant workers to prolong maintenance and repairs and destroy vital spare parts and repair tools. Over 90% of the defendants' electricity spot sales were based upon the manipulation of shortages and withholding of electricity.

Defendants named in the suit include: Dynegy Power Marketing, Enron Energy Services, Enron Power Marketing, PG&E Trading, Reliant Energy Services, Sempra Energy Trading, Sempra Energy Resources, Southern Company Energy Marketing, Williams Energy Marketing and Trading, Williams Energy Services, Duke Energy Trading and Marketing, NRG Energy, and Morgan Stanley Capital Group.

The San Francisco City Attorney's Office retained Milberg Weiss Bershad Hynes & Lerach LLP as outside counsel on this matter.