Today, we are seeking to make power pirates pay a California penalty for their illegal profiteering

Bill Lockyer California attorney general

The state is keen to find ways of making back some of the billions it had to spend on emergency power to avert the rolling blackouts and shortages that the crisis caused.

That summer, wholesale electricity prices leapt by a factor of 10 as a deregulated market combined with a hot summer and capped retail prices.

The suit, filed in San Francisco Supreme Court, alleges that the quartet used the crisis to charge "unjust, unreasonable and illegal rates" in violation of California's Unfair Competition Act.

"It caused the prices to increase as much as 1000%," California Attorney General Bill Lockyer told the BBC's World Business Report.

"That meant rates jumped rather substantially, there were business impacts and job losses, a rather serious array of economic consequences," he said.

'Thousands of offences'

The state is seeking damages for what attorney general Bill Lockyer said were "hundreds of thousands" of illegally priced electricity deals.

With each worth a civil penalty of $2,500, the total damages could reach $1bn, he said.

"Today, we are seeking to make power pirates pay a California penalty for their illegal profiteering," he said in a statement.

More to come?

More suits could be on the way, he added, saying some two dozen other companies are being investigated.

The state is also looking for $12bn from federal regulators in compensation.

But the energy companies noted that re-election campaigns for both Mr Lockyer and Gray Davis, the state's governor, were just getting under way.

"We continue to have lawsuits, we continue to have punitive legislation, and we still don't have a long-term solution to California's energy crisis," said Mirant spokesman Patrick Dorinson.