FERC ALJ: Parties Have Three Weeks to Settle El Paso Dispute

As was expected, FERC Chief Administrative Law Judge Curtis Wagner Jr. last Thursday refused to appoint a judge to oversee negotiations of a money settlement in the high-profile dispute in which two El Paso Corp. affiliates are accused of illegally rigging bids for pipeline capacity and violating the Commission's affiliate standards. He said the parties have three weeks to settle the dispute on their own.

Wagner's decision was in response to a request by El Paso Merchant Energy Co. L.P. (EPME) and El Paso Natural Gas to designate a judge to negotiate a monetary settlement between parties in the case, and allow him 60 days to accomplish this objective. The El Paso affiliates at the time asked Wagner to defer his initial decision, which he has said he will issue on Oct. 9, until after the 60-day settlement process is completed [RP00-241].

But Wagner said he didn't believe he had the authority to push back the deadline for issuing his initial decision, especially since FERC Chairman Pat Wood had directed him to "act expeditiously" on the matter. "Further, it is the Chief Judge's perception that when all parties are not agreeable to the appointment of a settlement judge, the process is usually unsuccessful." The California Public Utilities Commission (CPUC), which brought the complaint against the El Paso affiliates, supports the parties pursuing a negotiated settlement, but without the aid of a settlement judge. FERC trial staff, also a party in the case, sided with the CPUC on this issue.

Although he rejected the petition for a settlement judge, Wagner still "strongly urges" parties to reach a money settlement in the case. In fact, he called on the parties to informally begin settlement talks immediately. "This will give [parties] a little more than three weeks to talk before the initial decision is issued."

Unless a money settlement is brokered before Oct. 9, Wagner is faced with the daunting task of deciding whether EPME intentionally drove up prices for delivered natural gas to the California border beginning in mid-2000, and whether El Paso pipeline rigged the bidding for capacity on its system to favor EPME during a February 2000 open season. EPME was awarded 1.22 Bcf/d of firm capacity on El Paso pipeline, which is more than one-third of the capacity on the line. EPME's contract arrangement with El Paso pipeline expired at the end of last May.

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