Ex-Employee: Ratepayers Footing Bill For Sempra Retreat

Sempra Conference Center Known As Casa Azul Cost $20M, Former Exec Says

In a joint investigation between 10News and The San Diego Union-Tribune, a former Sempra Energy executive said ratepayers are footing the bill for an extravagant company retreat in Mexico.

Located just north of Ensenada is a 14-bedroom complex that features an exquisite fountain, arching columns and an impressive view of the ocean. Inside, there is a mammoth bar, a sea of stainless steel and more stunning views.

"It's the Taj Mahal of conference centers," said Rudy Michelon. "I think it's a monument to excess and greed."

Michelon said he wrote checks that paid for the house known as Casa Azul, which was built next to Sempra's liquefied natural gas plant in Mexico.

Hired to oversee finances for Sempra in Mexico, Michelon said he received a documented $9.6 million request in 2006 to build the executive conferencing center. It was signed off by Sempra CEO Donald Felsinger.

"What I found odd was the CEO's personal involvement," said Michelon.

Michelon said Felsinger handpicked every detail, including personally testing out the bed sets that totaled out to $55,000.

Additionally, Michelon showed 10News invoices for a dining room table that cost $25,000, as well as a ceiling lamp that was worth $21,000.

The bills alarmed Michelon, who said he questioned his direct boss.

"He asked me if I liked my job … if I did, I'd let it go," said Michelon.

He did, and the tab grew.

For example, an order of $2,000 armchairs added up to $43,000. A particular sculpture was purchased for $9,000 and several candleholders were bought at $2,300.

The costs of Casa Azul eventually doubled to $20 million before it was completed in September 2009.

Michelon said for 7 months, he called the facilities manager to see how Casa Azul was being used.

"She told me the only person using the facility was the CEO," said Michelon.

He said he repeatedly complained to superiors before he was laid off in April as part of a reorganization effort. Michelon's lawyer, Dan Gilleon, filed a wrongful termination lawsuit that alleged a different reason.

"The bottom line is Sempra wanted this to stay quiet, and Mr. Michelon wasn't being quiet about it," said Gilleon.

Michelon is also speaking out about who is ultimately paying the bills. He said it is San Diego Gas & Electric customers.

In a statement, Sempra, the parent company of SDG&E, said, "Not a penny was charged to utility ratepayers," and called Michelon "a disgruntled former employee attempting to obtain money from the company by making outlandishly false claims."

However, in a company memo written by Michelon in June 2009, the expenses for Casa Azul were billed to Sempra Corporate, which often draws about half of its money from ratepayers, according to Michelon and expert testimony before the Public Utilities Commission.

Consumer advocate Michael Shames said, "That's worrisome and that's wrong."

Shames told 10News even if Casa Azul wasn't paid directly by ratepayers, SDG&E's profits end up paying for Sempra's expenses. He called Casa Azul a big mistake that is now hanging over SDG&E's recent request for a rate increase.

"It's another chapter in the increasingly large book of corporate excess," said Shames.

Sempra said, "The terminal attracts high-ranking dignitaries and visitors from all over the world." However the company declined comment on how often Casa Azul has been used.

10News traveled to Casa Azul to find out just how it's being used.

Barbed-wire fencing surrounded the complex, and hopes of getting a glimpse of the property were shut down at the security gate.

"Is the conference center there?" asked 10News' Michael Chen.

"That kind of information we don't have to give to you," the security guard at the complex said.

Michelon said, "This is one of those secrets they want kept."

Sempra said its board of directors ordered an independent investigation, which found Michelon's allegations without merit.

In the meantime, the Public Utilities Commission said ratepayers' money should not have paid for any part of Casa Azul. The commission requested the documents 10News and the Union-Tribune uncovered to make sure that is the case.

Sempra also released a statement on the Michelon's allegations. Read the full statement by at Sempra.com.