Subpoenas Sought in El Paso Price-Manipulation Case

Southern California Edison last week asked FERC Chief Administrative Law Judge Curtis Wagner Jr. to issue subpoenas to three pipeline companies and an energy marketer in California in an effort to ferret out "other factors" -- aside from those already attributed to El Paso Natural Gas -- that may have contributed to the escalating natural gas prices in the state.

The Rosemead, CA-based utility is seeking subpoenas for PG&E Gas Transmission-Northwest Corp., Transwestern Pipeline, Kern River Gas Transmission and Sempra Energy Trading Corp. as part of a FERC hearing into possible manipulation of gas prices by El Paso pipeline and its merchant power affiliates at the California border. The California Public Utilities Commission made the charge in a complaint case that was initiated last year.

FERC set the issue for hearing two weeks ago before Wagner, and ordered him to provide an initial decision within 60 days (see NGI, April 2). At issue is whether El Paso pipeline and affiliates El Paso Merchant Energy Gas L.P. and El Paso Merchant Energy Co. exercised market power to drive up natural gas prices at the California border.

FERC recommended that SoCal Edison, which intervened in the complaint case and authorized a study addressing the dominance of El Paso pipeline and affiliates in the California gas market, weigh "other factors" during the hearing that may have been responsible for the sharp rise in gas prices in the West. SoCal Edison said it is seeking data and documents from the three pipelines and Sempra Energy to include in a "revised comprehensive study" that will examine "other variables" in the gas market.

"These other [unspecified] factors may or may not contribute to the deplorable market conditions within California, but they do not mitigate El Paso and El Paso Merchant's market power or their exercise of that power. Other market factors merely provide the context within which respondents exercise market power," it said in its request for the subpoenas.

Given that PG&E Gas Transmission, Transwestern, Kern River and Sempra Energy were "non-participants" in the complaint case out of which arose the charges of market-power abuse and price manipulation, the only way to elicit responses from them is through subpoenas, SoCal Edison noted.

FERC's "usual data request procedures do not require responses from non-participants...The only method to compel responses from non-participants is through the issuance of subpoenas," the utility said.

Some of the information that SoCal Edison is seeking from the companies includes: daily throughput and contract capacity for each firm contract with primary delivery point rights to the California border since January 1999; the amount of unsubscribed delivery point capacity at the California border by delivery point and by month since Jan. 1, 2000; the aggregate daily nominations and throughput (by receipt point and delivery point combinations) for all shippers except El Paso Merchant Energy to the California border since March 1, 2000; daily throughput and capacity to the California delivery point since Jan. 1, 1997; the daily nominations, throughput and firm capacity held by El Paso Merchant Energy under any contracts since June 1, 1999, specified separately by each contract; and the price, maximum rate, volume term, producing basin and delivery location data for all interruptible transportation contracts since March 1, 2000 to the California border.

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