FERC yesterday ordered El Paso Merchant Energy to stopstonewalling and turn over protected materials to parties involvedin a complaint case in which it’s alleged the affiliate receivedpreferential treatment when it acquired 1.2 Bcf/d of firm capacityon El Paso Natural Gas.

Specifically, the Commission denied El Paso Merchant’s requestfor rehearing of a June 2000 order that granted in part thediscovery sought by the California Public Utilities Commission, andrejected rehearing of a September protective order. The latterdirected El Paso Merchant to make available to all interveningparties, who agreed to the terms of the protective order, all ofthe materials that were being submitted to the CPUC and FERC in thecase.

So far, El Paso Merchant has refused to release the informationto these parties, claiming the materials being filed with the CPUCand FERC are for “Government Eyes Only.” It also argues that theprotective order offers inadequate protection of commerciallysensitive information.

The Commission disagreed. “El Paso Merchant has notsubstantiated or sufficiently justified its broad claim that all ofthe ‘protected materials’ provided to CPUC and this Commissionwarrant the designation ‘Government Eyes Only.’ Indeed, all of theinformation that El Paso Merchant seeks to shield…relatesdirectly to the issues,” the order said [RP00-241]. Also, FERCfinds that the protective order provides “sufficient protection forEl Paso Merchant’s commercially sensitive documents.”

The CPUC brought the complaint last April. It is seeking toabrogate the $38 million contract arrangement between El Paso andEl Paso Merchant. The agency alleges the affiliate was given”preferential treatment” by El Paso during the open season for thecapacity, and thus the contract arrangement should be declaredvoid.

The CPUC and others contend the contract arrangement, whichawarded more than one-third of El Paso’s capacity rights to theCalifornia border to El Paso Merchant, is largely responsible forthe high natural gas and electric prices in the state. They haveurged FERC to “act immediately” on the merits of the complaint, butthe Commission has yet to do so.

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