California regulators, Pacific Gas and Electric (PG&E) and Southern California Edison have rallied in support of the FERC enforcement’s request for a separate investigation into whether El Paso Natural Gas withheld interruptible transportation (IT) service last winter to drive up natural gas prices in Southern California.

Despite El Paso’s claims otherwise, the Commission’s Market Oversight and Enforcement Section (MOE) “is not seeking to convert” the proceeding that’s still in progress at FERC into an investigation, or to “avail itself of a second opportunity to attempt to prove that withholding did occur under its theory of the case,” Edison said.

“Rather, MOE has recommended a separate investigation into why IT did not flow on [El Paso] when it would have been expected to do so and whether that result was caused by a violation by [El Paso] of the Commission’s regulations,” the Rosemead, CA-based utility noted.

El Paso and its affiliate, El Paso Merchant Energy Co. (EPME) , have called MOE’s request for a further probe and its associated comments an abuse of process and a violation of their due process rights, given that they already had been cleared of any market-power and withholding abuses during a hearing last summer and in the initial decision of Chief Administrative Law Judge Curtis Wagner

The El Paso charges are “patently preposterous,” claims Edison. While MOE “did express certain conclusions” about the evidence in the ongoing El Paso case at FERC, it “did not focus on, or pronounce an ultimate conclusion, about the issue” that was at the center of last summer’s hearing — whether El Paso pipeline and EPME possessed and exercised market power to inflate gas prices in Southern California. Although Wagner has ruled on the market-power issue, it has not been forwarded yet to the full Commission, which can either accept it or reject it in full or part.

In separate comments, California regulators and PG&E agreed with Edison’s assessment. “Although El Paso may be unhappy with the content of the MOE comments, there is absolutely no ‘due process’ problem or other impropriety that should cause the Commission to strike” the comments from the record, they said.

By seeking to strike the comments, El Paso “is attempting to sweep under the carpet important, helpful, and independent analysis of the record evidence by MOE…The Commission should give them careful consideration as it reviews this case,” the California Public Utilities Commission and PG&E told FERC.

MOE last month asked the Commission for the go-ahead to explore whether the El Paso pipeline violated FERC’s open-access regulations by withholding IT capacity from its customers during the period of November 2000 through March 2001. MOE claims that the issue it raises was neither the focus of last summer’s hearing nor Wagner’s initial decision that was issued in October. The El Paso companies argue otherwise.

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