BP to pay California $102 million to settle claim it overcharged the state for natural gas

BP Energy Co. has agreed to pay $102 million to California to settle claims that it overcharged the state for natural gas purchased over a decade ending in August 2012, Atty. Gen. Xavier Becerra announced Thursday.

The settlement of a lawsuit against the firm includes substantial penalties, but Becerra would not say how much the state was actually overcharged on natural gas used by the state and local governments to heat classrooms and public offices.

“Cheating the state of California is not a good business strategy,” Becerra told reporters at his Sacramento office. “The last thing that any of us needs is to be ripped off by a company that does business with your great state and your government.”

BP said in a statement that the state’s allegations of overcharging “were entirely without merit.  BP strongly believes it honestly and fairly met its obligations under its contracts with the state.”

Becerra said the case stems from allegations by a whistleblower that BP engaged in misrepresentations and overcharged in three natural gas contracts with the state. The whistleblower, an unidentified former BP employee, will get an unspecified portion of the settlement for helping to build the case.

“British Petroleum thought it could get away with overcharging the state of California by providing false and misleading information to help its own bottom line,” Becerra said. He said one BP employee allegedly described the transactions with the state as allowing the firm to “squeeze gold out of that goose.”

“Well, California just squeezed back,” Becerra said.

The firm said in its statement Thursday that the state’s Department of General Services confirmed it agreed to the terms of each transaction.

“But given the cost of protracted litigation and the unpredictability of outcomes at trial, BP has agreed to this compromise settlement for an amount well below what the state demanded in its complaint,” the statement added. “We believe resolving this dispute in this manner is in the best interest of BP and its shareholders.”

Becerra also said Thursday that he is prepared to take action to block a Trump administration proposal that could allow more oil drilling off the coast of California.

“That one is a nonstarter for us and we are prepared to do anything it takes,” he said.


BP to pay California $102 million to settle claim it overcharged the state for natural gas, by Patrick McGreevy, The Los Angeles Times, January 11, 2018.

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