San Diego Gas & Electric customers are paying $1.2 million a month to transport natural gas to a power plant that doesn't even supply the region with energy, the California Department of Water Resources and the utility claim in a newly filed lawsuit.
According to a report from Courthouse News Service, state regulators say the finances of Sunrise Power Company were sabotaged by former owner Chevron in order to dodge responsibility for a natural-gas transportation contract.
In 2002, SDG&E contracted to purchase power from Sunrise's natural-gas plant in Fellows, California — about 30 miles southwest of Bakersfield in Kern County. The state agreed to pay for natural gas and its transmission through pipelines owned by Kern River Gas Transmission Company for the duration of the 10-year contract. But because the pipeline owner required a 15-year transmission agreement, Sunrise and Chevron agreed to take over responsibility once SDG&E's agreement expired in 2012.
When the time came, however, the transmission company refused to allow the transfer of the remaining contract term, saying Sunrise didn't meet its creditworthiness standards.
"Defendants had managed Sunrise in such a manner that, at the end of the term of the [contract], Kern River contended that Sunrise did not meet the minimum creditworthiness standards specified in Kern River's tariffs," reads a portion of the complaint. For its part, parent company Chevron refused to step in and offer a credit guarantee on behalf of Sunrise, leaving SDG&E and the state holding the bag for continued transmission costs.
In 2014, Chevron sold off its share in Sunrise to co-defendant NRG Energy, another Texas-based energy firm that is slated to build a controversial new gas plant on the Carlsbad coast. NRG, for its part, has also refused to use its considerable resources to shore up Sunrise's credit in order to make good on the subsidiary's agreement to take over the pipeline contract.