PG&E Says Cut ROFR from El Paso Contracts
PG&E National Energy Group has called on FERC to rid El Paso
Merchant Energy's contract arrangement with affiliate El Paso
Natural Gas of its right-of-first-refusal (ROFR) provision, which
it says will give the unregulated marketing affiliate "first call"
over non-affiliates in bidding for the 1.2 Bcf/d of firm capacity
when its contracts expire in May.
"Elimination of El Paso Merchant's ROFR is necessary to protect
the public interest. Once this unfair advantage is eliminated, new
shippers may compete fairly for capacity with El Paso Merchant and
not be forced to obtain transportation service or bundled services
from the unregulated marketing affiliate," said PG&E National
Energy and affiliated companies.
"This solution also will allow other [competing] bidders to
obtain at least a pro rata share of any matched bids and will allow
El Paso Merchant to obtain capacity as well," they told the
"With the ability to exercise its ROFRs and control 1.2 Bcf of
El Paso capacity, El Paso Merchant is effectively a surrogate for
the El Paso pipeline," charged PG&E National Energy and related
If the Commission should deny California regulators' pending
request to abrogate the contracts between El Paso and its
affiliate, Southern California Gas also asked FERC to purge the
ROFR provision so that non-affiliate bidders could at least have a
shot at blocs of the 1.2 Bcf/d capacity when it comes up for sale.
If neither actions are possible, SoCal asked the Commission to
clarify that the contracts between El Paso and its marketing
affiliate cannot provide for a delivery point at SoCal-Topock.
Assuming FERC decides to remove the ROFR provision, SoCal and
PG&E National Energy requested that a new open season be held
for the 1.2 Bcf/d of capacity that becomes available on June 1,
2001. El Paso Merchant's capacity contracts expire May 31.
PG&E National Energy and SoCal submitted their comments as
part of a complaint proceeding in which the California Public
Utilities Commission is seeking to dissolve the contract
arrangement between El Paso Merchant and the El Paso pipeline
[RP00-241]. The state regulators claim that El Paso Merchant was
shown preference over non-affiliate bidders during the open season
for the capacity.
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