FERC Chief Administrative Law Judge Curtis L. Wagner Jr. denied Sempra Energy’s bid to quash a Commission subpoena that orders it to turn over information relevant to a hearing into possible manipulation of natural gas prices in the California market. He also ordered three Enron companies to respond to subpoenas in the case.

Wagner rejected Sempra Energy’s request on the grounds that the subpoenaed material being sought on behalf of Southern California Edison was “very relevant” to the case. He ruled that the “material [was] necessary in order to look at as big a portion of the market as possible so that this Commission can decide whether market power has been exercised here to control [gas] prices.”

Moreover, Sempra Energy’s argument that it shouldn’t be subject to the subpoena since it was a non-party to the case was rejected by Wagner. This “was not persuasive [since] in any civil case parties must rely upon non-parties for portions of their evidence.”

Wagner issued the subpoenas to Sempra Energy in response to a request by SoCal Edison. In addition to Sempra Energy, SoCal Edison also sought subpoenas for PG&E Gas Transmission-Northwest, Transwestern Pipeline and Kern River Gas Transmission and three Enron companies as part of the Commission probe into the possible manipulation of gas prices by El Paso Natural Gas and its merchant power affiliates at the California border.

On April 18, Wagner issued subpoenas to Enron North America Corp., Enron Energy Services Inc. and Enron Energy Marketing Corp., saying that SoCal Edison has shown “good cause” for its request. In response, Enron pointed out that its subsidiary, Enron North America, was already a party to the case, and therefore a subpoena wasn’t necessary. A simple data request to the company would have sufficed, it said.

FERC set the price-manipulation issue for a fast-rack hearing before Wagner in early April and ordered him to provide an initial decision by late May. But the Commission recently, in response to a rehearing request, gave Wagner the go-ahead to extend the deadline for the decision until July 12. Wagner indicated last week that he will issue an initial decision in the case “on or before” June 30. At issue in the hearing, which is scheduled for next month, will be whether El Paso pipeline and affiliates El Paso Merchant Energy Gas LP and El Paso Merchant Energy Co. exercised market power to drive up natural gas prices at the California border.

FERC advised SoCal Edison, which intervened in the complaint case and authorized a study addressing the dominance of El Paso pipeline and affiliates in California, to use the hearing to consider “other factors” — aside from those already attributed to El Paso — that also may have contributed to the sharp rise in gas prices in the West. SoCal Edison said it is seeking the data and documents from the three pipelines, Enron companies and Sempra Energy in compliance with the Commission’s directive. It plans to undertake a “revised comprehensive study” of “other variables” that may be to blame for the high gas prices in California. But SoCal Edison has said it doesn’t believe the study’s conclusions will be much different than those of the first study, which pinned the high prices on El Paso.

In addition to acting on the Sempra Energy and Enron subpoenas, Wagner ordered the California Public Utilities Commission (CPUC) — which brought the price-manipulation complaint against El Paso pipeline and affiliates — to respond to all of the data requests of El Paso Merchant. The CPUC objected to turning over much of the information, saying that El Paso Merchant’s requests were “unduly burdensome, vague and over broad.”

Wagner ruled that any document or data that the CPUC’s relies upon must turned over during discovery. “In other words, anything the CPUC has done in connection with this case is discoverable.”

In related action, Wagner adopted special procedures to prevent further release to the media of El Paso’s “highly sensitive marketing materials” that the pipeline has been required to make available as part of discovery in the complaint case initiated by the CPUC.

The special procedures, which El Paso and Pacific Gas and Electric (PG&E) have agreed to, governs the handling of “highly sensitive information” for which El Paso believes “protected materials” status would not provide sufficient protection, according to an order issued on April 20.

Under the new procedures, El Paso’s highly sensitive documents: 1) can only be reviewed at the Washington, D.C. law firm of Andrews & Kurth LLP; 2) only attorneys and outside consultants with SoCal Edison, PG&E, FERC staff and the CPUC can review the documents; they can take notes of the documents, but the notes must be destroyed when the case is no longer subject to judicial and/or Commission review; 3) with one exception, reviewing parties may not make copies of the highly sensitive documents; 4) a log will be kept of all individuals that review the documents; and 5) if the complainant (CPUC) or any other party wants to introduce any of the documents into evidence, El Paso agreed that an actual copy of the documents will be provided for that purpose to the reviewing party within 24 hours.

The special procedures come in the wake of an “apparent disclosure” to The New York Times of El Paso documents that were supposed to be sealed and protected as part of the CPUC’s complaint accusing El Paso pipeline and its affiliates of improper and possibly illegal practices in the California gas market. FERC has initiated a formal, non-public investigation into the leak, headed by Wagner.

©Copyright 2001 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.