Chief Administrative Law Judge Curtis L. Wagner Jr. has denied Sempra Energy’s bid to quash a FERC subpoena that ordered it to turn over information relevant to a hearing into possible manipulation of natural gas prices in the California market.

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 dismissed 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 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.

SoCal Edison last week petitioned to add Enron North America Corp., Enron Energy Services Inc. and Enron Energy Marketing Corp. to its growing list of subpoena recipients. Wagner granted SoCal Edison’s request late Friday and issued the subpoenas to the Enron companies, saying “good cause” had been shown.”

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 last week, in response to a rehearing request, gave Wagner the go-ahead to extend the deadline for the decision until July 12. At issue in the hearing is 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.

In addition to acting on the Sempra Energy subpoena, Wagner has 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 on 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 turn over as part of discovery in the complaint cased initiated by the CPUC.

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

Under the new procedures, these El Paso’s highly proprietary 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 such 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 long 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 merchant power affiliates of engaging in improper and possibly illegal practices to drive up natural gas prices in the California market. FERC has initiated a formal, non-public investigation into the lead, headed by Wagner.

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