-- After-Tax Cost of Settlement Totals Approximately $350 Million
-- Settlement Covers Continental Forge, Nevada and Natural Gas
Price Reporting Cases
-- Company Provides 2005 Earnings-Per-Share Guidance of
Approximately $3.60
-- Conference Call/Webcast Scheduled for 4:45 P.M. EST
SAN DIEGO, Jan. 4, 2006 (PRIMEZONE) -- Sempra Energy (NYSE:SRE) and its two California utilities, Southern California Gas Co. (SoCalGas) and San Diego Gas & Electric (SDG&E), today announced that they have entered into a settlement agreement to resolve the claims of litigants in several class-action lawsuits related to the Western U.S. energy crisis of 2000-01, including the Continental Forge, Nevada and some natural gas price reporting cases. Under the terms of the settlement, Sempra Energy and its utilities vigorously deny any wrongdoing.
The after-tax cost of the settlement to Sempra Energy is approximately $350 million, including a $100 million after-tax charge recorded in the fourth quarter 2005. Earnings in future years will not be materially impacted by the settlement.
"This agreement will put the major pieces of energy-crisis litigation behind us," said Stephen L. Baum, chairman of Sempra Energy. "Above and beyond the costs to our company, this settlement will provide substantial benefits to millions of energy consumers in California and Nevada."
"We now can concentrate our energies on the continued successful execution of our business plans that are focused on developing new energy infrastructure and supplies for our customers," said Donald E. Felsinger, president and chief executive officer of Sempra Energy. "We have preserved the strength of our balance sheet and maintained the liquidity to fund our capital-expenditure plans."
The agreement is subject to approval by the San Diego Superior Court, the Nevada District Court for Clark County, the City of Los Angeles and the City of Long Beach, Calif.
Highlights of the settlement agreement are as follows:
Cash Payments
-- Commencing upon final approval of the settlement agreement,
Sempra Energy agrees to pay $377 million in cash to the
claimants, of which $211 million will be payable in eight annual
installments and $166 million will be payable in two annual
installments. The settling claimants include: representatives of
natural gas and electric utility ratepayers in California, the
cities of Los Angeles and Long Beach and the Attorney General of
the State of Nevada.
Modifications in Power-Supply Contract with the CDWR
-- Through its Sempra Generation unit, which has a long-term
power-supply contract with the California Department of Water
Resources (CDWR), Sempra Energy agrees to a unilateral price
reduction effective Jan. 1, 2006, and continuing for the
remaining six years of the contract, totaling $300 million.
-- Sempra Generation also will unilaterally limit the exercise of
its delivery-point flexibility under the CDWR contract.
Changes in Utility Operations
-- SoCalGas and SDG&E agree to make structural and reporting
changes, primarily related to the utilities' gas transmission,
storage and procurement activities. These proposed changes,
which will require California Public Utilities Commission (CPUC)
approval, will increase regulatory oversight of natural gas
operations, enhance the transparency of utility operations to
market participants and provide large customers more choices as
to how they can gain access to, and operate on, the utility
systems. The settlement agreement is not contingent on CPUC
approval of these measures.
LNG Supply for California
-- Through its Sempra LNG unit, which is building a liquefied
natural gas (LNG) receipt facility in Baja California, Mexico,
Sempra Energy agrees to provide regasified LNG to SoCalGas and
SDG&E, subject to CPUC approval. The sales price will be $0.02
per million British thermal units less than the California
Border Index price for natural gas.
San Diego Superior Court Judge Ronald S. Prager will oversee the approval process for the settlement agreement and expected distribution of the settlement proceeds to class members in California.
Updated Earnings Guidance
Sempra Energy today updated its 2005 earnings-per-share guidance to approximately $3.60, due to improved performance in the company's commodities business. This revised guidance includes recognition of the $100 million fourth-quarter charge. Previous 2005 earnings-per-share guidance was $3.40 to $3.60.
Conference Call
Sempra Energy has scheduled a live Webcast to discuss the litigation settlement at 4:45 p.m. EST. Access is available by logging onto the Web site at www.sempra.com. For those unable to log onto the live Webcast, the teleconference will be available on replay a few hours after its conclusion by dialing (706) 645-9291 and entering the passcode 3989438.
Sempra Energy has included additional information on the settlement in a Form 8-K to be filed with the Securities and Exchange Commission. Settlement of the Continental Forge lawsuit does not terminate other ongoing energy-crisis-related litigation against Sempra Energy and its affiliates.
Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2004 revenues of $9.4 billion. The Sempra Energy companies' 13,000 employees serve more than 29 million consumers in the United States, Europe, Canada, Mexico, South America and Asia.
This press release contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When the company uses words like "believes," "expects," "anticipates," "intends," "plans," "estimates," "may," "would," "should" or similar expressions, or when the company discusses its strategy or plans, the company is making forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future results may differ materially from those expressed in the forward-looking statements. Forward-looking statements are necessarily based upon various assumptions involving judgments with respect to the future and other risks, including, among others: local, regional, national and international economic, competitive, political, legislative and regulatory conditions and developments; actions by the California Public Utilities Commission, the California State Legislature, the California Department of Water Resources, the Federal Energy Regulatory Commission and other regulatory bodies in the United States and other countries; capital markets conditions, inflation rates, interest rates and exchange rates; energy and trading markets, including the timing and extent of changes in commodity prices; the availability of natural gas; weather conditions and conservation efforts; war and terrorist attacks; business, regulatory, environmental, and legal decisions and requirements; the status of deregulation of retail natural gas and electricity delivery; the timing and success of business development efforts; the resolution of litigation; and other uncertainties, all of which are difficult to predict and many of which are beyond the control of the company. These risks and uncertainties are further discussed in the company's reports filed with the Securities and Exchange Commission that are available through the EDGAR system without charge at its Web site, www.sec.gov and on the company's Web site, www.sempra.com.
Sempra LNG and Sempra Pipelines & Storage are not the same companies as the utilities, SDG&E or SoCalGas, and are not regulated by the California Public Utilities Commission. Sempra Energy Trading, doing business as Sempra Commodities, and Sempra Generation are not the same companies as the utilities, SDG&E or SoCalGas, and the California Public Utilities Commission does not regulate the terms of their products and services.