PG&E National Energy Group has called on FERC to rid El PasoMerchant Energy’s contract arrangement with affiliate El PasoNatural Gas of its right-of-first-refusal (ROFR) provisions, whichit claims will give the unregulated marketing affiliate “firstcall” over non-affiliates in bidding for the 1.2 Bcf/d of firmcapacity when its contracts expire in May.

“Elimination of El Paso Mechant’s ROFR is necessary to protectthe public interest. Once this unfair advantage is eliminated, newshippers may compete fairly for capacity with El Paso Merchant andnot be forced to obtain transportation service or bundled servicesfrom the unregulated marketing affiliate,” wrote PG&E NationalEnergy and affiliated companies.

“This solution also will allow other [competing] bidders toobtain at least a pro rata share of any matched bids and will allowEl Paso Merchant to obtain capacity as well,” they told theCommission.

“With the ability to exercise its ROFRs and control 1.2 Bcf ofEl Paso capacity, El Paso Merchant is effectively a surrogate forthe El Paso pipeline,” charged PG&E National Energy and relatedcompanies.

If the Commission should decide to remove the ROFR provisions,then it also should order a new open season to be held for the 1.2Bcf/d of capacity that becomes available on June 1. El PasoMerchant’s capacity contracts expire May 31.

PG&E National Energy submitted its comments as part of acomplaint proceeding in which the California Public UtilitiesCommission is seeking to abrogate the contract arrangement betweenEl Paso Merchant and the El Paso pipeline [RP00-241]. The stateregulators claim that El Paso Merchant was shown preference overnon-affiliate bidders during the open season for the capacity.

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