Sempra prevails in contract dispute with Calif.

* Sempra sued to stop cancellation of 10-year contract

* State opposed outside purchase, resale of power

* Jury finds contract allows power from any source

LOS ANGELES, Dec 1 (Reuters) - A San Diego jury has ruled
that Sempra Energy (SRE.N) did not breach its $6.6 billion
contract with the state of California for failing to build a
power plant near Bakersfield on time, both parties said on
Tuesday.

The state threatened to cancel the 10-year contract after
Sempra changed a plan to build the Elk Hills power plant in two
stages, allowing it to produce power faster and alleviate
soaring prices during the 2001-2002 energy deregulation
debacle.

Sempra instead skipped the interim stage because prices had
already begun to abate, and had Elk Hills up and running a year
after the state's April 1, 2002, deadline, Sempra attorney
Michael Hennigan said.

The state contended that Sempra breached the contract by
missing the deadline and by purchasing and reselling power to
cover demand while the plant was being built.

Sempra asked a court for a declaratory judgment that it had
interpreted the contract correctly, and the state countersued
for breach of contract in San Diego Superior Court.

The jury on Monday ruled in favor of Sempra and denied the
state's request to void the contract and order Sempra to pay
about $2 billion in damages, Hennigan said.

A state spokesman had no immediate comment.

The state has been embroiled in a series of disputes over
the Elk Hills power plant against Sempra, the largest U.S.
natural gas distributor, since about 2002.

"Right after this contract was signed the price of energy
in California dropped back to historical levels," Hennigan
said. "The minute that happened (the Department of Water
Resources) got criticized for entering into too many contracts,
at too high a price and too long a term -- so they started
trying to get out of them."

The parties are scheduled to go to arbitration over another
dispute -- the fourth -- involving the Elk Hills contract,
Hennigan said.

The case is Sempra vs. California Department of Water
Resources, Case No. GIC789291, San Diego County Superior
Court.
(Reporting by Gina Keating, editing by Matthew Lewis)
((gina.keating@thomsonreuters.com; + 1 213 955 6776; Reuters
Messaging; gina.keating.reuters.com@reuters.net))