El Paso Natural Gas has agreed to pay Southern California Edison$32 million and make other concessions to prevent its hard-fought1996 rate settlement from collapsing like a house of cards. Thedeal ends four years of litigation by Edison, which tried to derailthe settlement from the very start.
“There was a potential that the whole thing [1996 El Pasosettlement] could fall apart,” said one source familiar with thecase, adding that El Paso agreed to pay Edison the large sum “tomake the whole thing go away.” The agreement, which requires FERCapproval, was filed at the Commission on Aug. 4. Industry commentsare due by next Monday [RP-363-002].
“We’re happy to have the litigation behind us. And we believethat the settlement is a fair and just resolution of all of theissues that divided us,” said Kevin Lipson, a Washington D.C.attorney for Edison. “We look forward to prompt Commission approvalof the settlement agreement.”
Under the terms of the agreement, El Paso will pay Edison $32million plus interest from July 1, 1999 until the date of payment.The payment “resolves all issues and claims raised or that couldhave been raised” by Edison between Jan. 1, 1996 through June 30thof this year. Also, Edison will receive the same rates that applyunder the 1996 settlement for firm service to California,retroactive to July 1. In return, Edison has agreed to withdraw itsopposition to the settlement and will terminate its rate litigationat FERC.
At issue all along has been Edison’s right to contest the ElPaso settlement as both a direct customer of the pipeline and anindirect customer (via Southern California Gas). In the 1997 ordersapproving the El Paso settlement, FERC acknowledged Edison’s rightto contest the settlement as a direct customer of El Paso, thusallowing the California utility to be severed from the settlementand its rates litigated separately. But the Commission declinedEdison’s request to also litigate its objections to the settlementas they applied to SoCalGas, which supplied Edison with gastransported by El Paso. This made Edison an indirect customer of ElPaso as well.
Last December, the D.C. Circuit Court of Appeals reversed andremanded the orders approving the 1996 settlement, holding thatFERC’s ruling with respect to Edison’s claims as an indirectcustomer was “inconsistent with the settlement precedents of boththe Commission and this Court.” The decision threatened the veryfoundation of the El Paso settlement.
©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.
© 2023 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |