El Paso Natural Gas Co. and El Paso Merchant Energy (EPME) Friday filed a petition with FERC, seeking the appointment of an administrative law judge to facilitate settlement negotiations with California regulators over charges that El Paso abused market power and affiliate regulations in the transportation of gas along its Southwest pipeline system. The El Paso companies emphasized that the motion does not represent a retreat “in any way from their position” that they did not engage in market power in the California gas market, artificially raise gas or electricity prices, or engage in affiliate abuse.

In its complaint, the California Public Utilities Commission argued that EPME intentionally withheld capacity from the market to drive up delivered prices for gas in California beginning in mid-2000, and that El Paso pipeline violated the Commission’s affiliate standards by rigging the bidding process to favor affiliate EPME during a February 2000 open season. EPME was awarded 1.22 Bcf/d of capacity on affiliate El Paso pipeline, which was more than one-third of the total capacity on its line. The 15-month contracts for the capacity expired in May.

The El Paso companies petitioned FERC to give the settlement judge a 60-day period to seek a resolution and asked FERC Chief Administrative Law Judge Curtis Wagner to delay the date for an initial decision in the case until the proposed settlement period ends. In a procedural order late last month, Wagner urged the parties to give “serious consideration to disposing of this case by a negotiated settlement,” adding that it “would be in the interest of all” concerned (see Daily GPI, Aug. 31).

“This ongoing litigation — which, as the chief judge has recognized, is far from over — has proved to be a continuing drain on the resources of EPME and EPNG,” the companies said in their petition. “This is likely to be true for other parties, as well.” The El Paso companies’ motion contends a settlement judge could bring a “dose of reality” to a case in which “each side remains resolute in its litigation position.”

The companies, though, did not request an extension to the Sept. 14 date for interested parties to file post-hearing reply briefs. “If settlement does not appear likely at the end of the settlement period, the Chief Judge will already have a completely briefed record on which to render his initial decision,” the companies said.

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