While agreeing that FERC needs to explore every issue in the California price-manipulation case against El Paso Natural Gas and its merchant power affiliates, Commissioner Nora M. Brownell has called on all parties to the action to “expeditiously” wrap up a supplemental hearing “so we can go to decision and move on.”

Last month, the Commission directed Chief ALJ Curtis Wagner Jr. to conduct a supplemental hearing into the “limited” issue of whether El Paso withheld interruptible service from customers for delivery to the California border during the period of November 2000 through March 2001. Wagner earlier had cleared El Paso and affiliate, El Paso Merchant Energy Co., of the withholding charges, but for a different time period.

Given that California natural gas prices spiked as high as $60/MMBtu during the November 2000-March 2001 period, “every question raised must be investigated and answered…All doubts must be removed,” said Brownell in a concurring opinion to FERC’s Dec. 27 decision re-opening the El Paso price-manipulation charges. The concurrence was issued on Jan. 11. But, she noted, “timely resolution” of the complaint case is essential as well.

Brownell believes the Commission needs to be more aggressive in monitoring and in mitigating incidents involving the exercise of market power. “We should not wait and simply investigate allegations of market-power abuse. We need to be proactive.” she said, adding that beefing up FERC’s market monitoring and enforcement capabilities must be a “top priority.”

“I am willing to punish and correct” energy companies that violate Commission rules, regulations and policies, Brownell noted, and “I just as strongly believe that we must exonerate [companies] in a public manner.”

In monitoring and enforcing the market, “I believe that the Commission must have timely and reliable data and information…We must be certain we are asking the right questions. We must be clear about what constitutes market power. We must understand the changing nature of the transactions (e.g. on-line trading). We must be effective and fair,” according to Brownell.

“I believe it is [also] important that our market-monitoring activities are complimentary to, but distinct from, the [FERC] litigation process. Otherwise, doubt about fairness will cloud our legitimate inquiry into the facts,” she said. The El Paso companies had argued that the new hearing and inquiry, which was requested by the Commission’s Market Oversight and Enforcement (MOE) Section, was simply an attempt to retry the capacity-withholding charges, after Judge Wagner had dismissed them. They claimed the action was an “abuse of process,” and would be detrimental to their rights in the case. But FERC dismissed El Paso’s arguments in the Dec. 27 order.

FERC has directed Wagner, who will preside over the supplemental hearing, to issue his decision on the “limited” capacity- withholding issue “as soon as practicable.” Once that is done, the Commission can then make its final ruling on two issues: 1) whether El Paso pipeline withheld capacity to drive up delivered prices for gas to the California border; and 2) whether El Paso rigged bidding on capacity to favor its affiliate, El Paso Merchant.

Wagner, in his October initial decision, found El Paso culpable on the latter charge. He ruled that El Paso pipeline had engaged in “blatant collusion” by maneuvering bidding for 1.2 Bcf/d of capacity on its system, which ultimately went to El Paso Merchant.

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