Azernews.Az

By Bloomberg

A BP Plc unit manager joked about “squeezing gold from that goose” when overcharging California for natural gas and reaping millions of dollars in unwarranted profit, California Attorney General Kamala Harris said in a lawsuit against the U.K.-based energy company.

Harris alleges that BP systematically billed state and local government facilities at prices that exceeded what the company was allowed to charge under its contracts over almost a decade. In November she joined a whistle-blower lawsuit against BP filed by a former company employee in 2012 and yesterday said in her own filing that California entities accounted for 35 percent of BP’s customer profit margin in the Rockies region, even though the state comprised only 8 percent of its business by volume.

BP’s American products businesses continually systematic quoted the state prices with profit margins that exceeded caps established under contracts with California, Harris said in the complaint in state court in San Francisco, citing internal records and communications.

In 2010, a BP trader e-mailed a manager for the California account about a purchase with a $4 million margin, saying, “Nice job btw,” according to the complaint.

“Thanks. Everyone so used to squeezing gold out of that goose, not a lot of love when it happens…LOL,” the manager replied, according to the complaint.

Natural Gas

The contracts were for procuring natural gas for California public entities, including Los Angeles County and the University of California. The state made hundreds of negotiated pricing purchases from 2003 to 2016, according to the complaint.

BP sold about $1.5 billion to $2 billion of natural gas to the California entities from about 2004 to 2012, according to the whistle-blower suit. The overcharges during that period were at least $150 million to $300 million, according to that complaint.

Harris seeks triple damages plus civil penalties under California’s False Claims Act.

“BP will defend itself vigorously against these meritless claims, which were brought by a former employee who was terminated more than a year before this suit was filed,” Geoff Morrell, a BP spokesman, said in an e-mailed statement. “We will respond to the claims in detail through legal filings to be made at the appropriate time.”

A copy of the complaint was provided by Harris’s office. It couldn’t immediately be confirmed in court records. David Beltran, a spokesman for Harris, had no immediate comment on it.

Under contracts with BP, the state could be charged the market or index price of gas at the beginning of the delivery month or a price negotiated by BP and the state, according to Harris. The negotiated pricing deals occurred when California and the company agreed to terms for BP to supply gas in the future at prices in lieu of the published index price.

Prices quoted to the state under either scenario couldn’t exceed the market price for gas plus 15 cents per 1 million British thermal unit, a standard unit of measurement for energy. In negotiated pricing deals, BP systematically quoted California prices that exceeded the agreed upon cap by 25 cents or more, “inducing the state to enter into hundreds of purchase agreements for overpriced gas,” Harris said in the court filing.

The case is State of California v. BP America Production Co., CGC-12-522063, California Superior Court, San Francisco County (San Francisco).