California’s chief energy regulator Monday blasted the Federal Energy Regulatory Commission for its decision last week to uphold El Paso Natural Gas Co.’s contract with an a affiliate for 1.22 Bcf/d of interstate pipeline capacity to the California border. Further, she speculated the investigation FERC did order, regarding allegations of market manipulation, was offered insincerely on a timetable that makes it moot.

Making it clear the state will try to pursue relief from the courts, California Public Utilities Commission President Loretta Lynch slammed FERC for rejecting any retroactive relief, and for dragging its feet so that any prospective relief, even if the charges are found to have some basis, will never be granted.

“I was quite disappointed at the FERC action that dismissed our allegations of affiliate abuse, using what in my opinion is a novel theory, meaning we would not be able to collect penalties for past acts between El Paso and El Paso Merchant Energy. So, I hope we can move forward to court on that aspect of the decision,” Lynch said. The CPUC filed a complaint with FERC a year ago regarding allegations of price fixing at the California-Arizona border, where the prices have been considerably higher than other hubs.

“Even more troubling was the second part of the decision regarding prospective relief on what’s left of the contract. We had asked for the contract to be held void because of El Paso market manipulations, and the FERC said (we) had put in some pretty strong evidence of market manipulation, so it ordered a hearing. But it set the hearing in 60 days, which is a time period that corresponds almost exactly with the expiration date of the contract.

“Thus, the El Paso contract expires May 31 and the FERC is poking along, will hold a hearing, and come out with a decision about the time that contract is moot. So in my opinion that decision will be moot, too.”

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