El Paso Corp. will pay the state of Arizona $3.4 million, invest another $43 million in capital improvement projects in the state and accelerate $30 million in already-planned pipeline integrity expenditures as part of a settlement that received final approval from the Maricopa County Superior Court on Monday. The settlement covers pending litigation against the company from the western energy crisis in 2000 and 2001.

“This settlement not only allows the company to eliminate the uncertainty of pending litigation but also fosters a new and positive relationship with the state of Arizona and its people,” said James Cleary, president of El Paso’s Western Pipeline Group. “El Paso has delivered natural gas to its Arizona customers for more than 50 years, and the settlement bodes well for a mutually beneficial relationship with Arizona into the 21st century.”

As part of the settlement, El Paso will provide grants totaling $3.4 million for various programs in the state: the Low-Income Energy Assistance Program; the “Energy for Arizona in the 21st Century” program; a study conducted by an independent organization selected by El Paso and the state to analyze ways to diversify Arizona’s energy supply portfolio and reduce its reliance on any one gas supply basin; and funding for an emergency preparedness/consequence management training and assistance program.

The settlement also includes El Paso investing $43 million for capital projects designed to improve interstate pipeline service in Arizona and conserve water in the state. And El Paso agreed to accelerate $30 million in planned pipeline integrity spending.

El Paso will seek recovery of these capital and pipeline integrity program expenses in its FERC-approved rates.

El Paso formalized a $1.625 billion settlement agreement in June 2003 with officials in California, Washington, Oregon and Nevada to resolve the principal litigation and claims following the western power crisis (see Daily GPI, June 27, 2003). California claimed the largest chunk of the funds, $1.45 billion in natural gas and electricity relief to retail utility customers.

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