Sempra Tries to Quash Subpoena in Price Manipulation Case

Sempra Energy Trading is seeking to quash a FERC subpoena that ordered the company to submit data relevant to a hearing that is examining potential price manipulation in the California natural gas market.

FERC Chief Administrative Law Judge Curtis Wagner Jr. issued the subpoena to Sempra Energy in response to a request from Southern California Edison (See NGI, April 16). In addition to Sempra Energy, the Rosemead, CA-based utility in its initial request also sought subpoenas for PG&E Gas Transmission-Northwest Corp., Transwestern Pipeline and Kern River Gas Transmission as part of the Commission probe into the possible manipulation of gas prices by El Paso Natural Gas and its merchant power affiliates at the California border. Last week, SoCal Edison petitioned to add Enron North America Corp., Enron Energy Services Inc. and Enron Energy Marketing Corp. to its growing list of subpoena recipients.

Sempra Energy cited a number of reasons in its request for Wagner to quash the subpoena. "First and foremost, Edison has made no attempt to show the relevance or materiality of the data it seeks from [Sempra] to the limited issues being litigating in this proceeding," it said. "Second, by its own admission, Edison is pursuing [Sempra] because it has been disappointed in the discovery obtained thus far" from El Paso pipeline and its merchant power affiliates in the complaint case, which was brought by the California Public Utilities Commission (CPUC) last year.

Third, the "extreme breadth and burden of Edison's data request" reveals that it is engaging in an "inappropriate 'fishing expedition' of questionable purpose," Sempra told Wagner. Lastly, the information being sought by SoCal Edison is "both proprietary and of extraordinary competitive sensitivity," it said.

FERC set the price-manipulation issue for hearing before Wagner earlier this month and ordered him to provide an initial decision by late May(see NGI, April 2). But the Commission last week, in response to a rehearing request, gave Wagner the go-ahead to extend the deadline for the decision until July 12 [RP00-241-003]. At issue in the hearing 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.

At the same time FERC advised SoCal Edison, which intervened in the complaint case and authorized a study addressing the dominance of El Paso pipeline and affiliates in the California market, to use the hearing to consider "other factors" --- aside from those already attributed to El Paso --- that also may have contributed to the sharp rise in gas prices in the West. SoCal Edison said it is seeking the data and documents from the three pipelines, Enron companies and Sempra Energy in compliance with the Commission's directive. It plans to undertake a "revised comprehensive study" of "other variables" that may be to blame for the high gas prices in California.

However, while the utility is heeding the Commission's advice to explore "other factors," it remains convinced that El Paso pipeline and its affiliates are at fault for the steep rise in gas prices. "These 'other 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," SoCal Edison said when it requested the subpoenas.

Given that the three pipelines, Enron companies and Sempra Energy were "non-participants" in the CPUC complaint against El Paso --- out of which arose the charges of market-power abuse and price manipulation --- the only way to elicit responses from them was through subpoenas, the utility noted. FERC's "usual data request procedures do not require responses from non-participants."

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