Top Washington D.C.-based energy trade associations are listedamong the casualties of Sempra Energy’s and Kinder Morgan Inc.’smove to prune their corporate budgets as they enter the newmillennium.

Sempra Energy has chosen to sever its membership ties with majorgas and electric associations — the Interstate Natural GasAssociation of America (INGAA), the American Gas Association (AGA),the Edison Electric Institute (EEI) and the Pacific Coast GasAssociation — “effective immediately.” At the same time, KinderMorgan has opted not to renew its membership in INGAA and otherenergy-related associations for next year and possibly beyond. Noneof the associations anticipate defections by any other members.

Kinder Morgan is “initiating a back-to-the-basics strategy intrying to return the company to profitability. So for now we’re notrenewing most of our [association] memberships,” said a spokeswomanfor the company. “But we do plan to be a part of those in thefuture again.” It also has closed its Washington office.

Sempra Chairman Richard D. Farman said the company’s decision tocut its association ties was “part of a series of corporateinitiatives to evaluate the continuing benefits and costs of allthat we do…..” Such a review was “critical” in a “quicklychanging competitive marketplace” and for Sempra to succeed in arestructured energy industry.

Sempra Energy, parent of Southern California Gas and San DiegoGas & Electric, is “one of our bigger members,” said AGAspokesman Daphne Magnuson, but she refused to reveal how much duesit had paid during the past year. Without Sempra, it’s estimatedthat AGA will be $800,000 poorer in 2000, according to sources.

Magnuson said Sempra’s departure from AGA “won’t have an affecton our operations” in 2000, because “we’re doing more with less.”She noted the association has cut costs for next year by $1.75million by moving into its D.C. headquarters and taking othersteps, while also not increasing members’ dues. That would put theassociation’s budget for 2000 at just under $25 million, with about$18 million coming from members’ dues. The LDC trade group,Magnuson said, hopes Sempra “will reconsider and come back” in2001.

Sempra’s and Kinder Morgan’s pullout from INGAA in 2000 willmean about $505,000 less in the pipeline group’s coffers —$475,000 less from Kinder Morgan and $30,000 less from Sempra. “Thefinancial hit is not going to be great for us,” said INGAAspokeswoman Anne Roland, because certain association members haveagreed to make up some of the shortfall that will be caused byKinder Morgan’s departure. INGAA member dues are based on apipeline company’s revenues, and are capped at $475,000. Theassociation’s budget in 2000 will be $5.2 million.

Kinder Morgan’s decision to exit INGAA wasn’t anything personal,according to Roland. “It wasn’t that they were displeased [withus]; it was that they were just cutting costs. They were going tohave a lean operation.” Kinder Morgan’s purchase of the financiallytroubled KN Energy earlier this year lead to its “shedding ofassets” and wanting to get its “financial house in order,” shenoted.

INGAA remains hopeful Kinder Morgan, parent of Natural GasPipeline Co. of America, will return to the INGAA fold once itshouse-cleaning effort is completed, Roland said. With the pipelinecompany’s exodus, the association will be left with 33 corporatemembers.

EEI spokesman Jim Owen refused to disclose the financial impactthat Sempra’s departure will have on the electric association,which represents investor-owned utilities. The group seems to betaking solace in the fact that Sempra’s move “wasn’t directed atany particular association, but [rather] was a strategic businessdecision on their part to drop out of all trade groups.” Inaddition to owning two major gas LDCs in California, Sempra is theparent of Southern California Edison.

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