Rigged

A federal district court judge in Colorado has rejected a proposed settlement between the U.S. Department of Justice (DOJ) and two independent producers over alleged rigged bidding in a government lease sale, saying the punishment did not fit the crime.

FERC yesterday did a complete about-face and set for hearing the allegations that El Paso Natural Gas rigged the bidding process for transportation capacity on its system to favor its merchant-power generation facilities. The decision was a major win for California parties and a disappointing setback for El Paso pipeline and its affiliates.

FERC last week cleared El Paso Natural Gas of charges that it rigged the bidding for capacity on its system during an open season in February 2000 to favor its affiliates El Paso Merchant Energy Gas L.P. and El Paso Merchant Energy Co., but allegations that the El Paso companies engaged in market and price manipulation weren’t as readily dismissed.

FERC yesterday cleared El Paso Natural Gas of charges that itrigged the bidding for capacity on its system during an open seasonin February 2000 to favor its affiliates El Paso Merchant EnergyGas L.P. and El Paso Merchant Energy Co. The charges arose when thetwo affiliates ended up the big winners, snaring contracts for 1.22Bcf of firm capacity to the California border – about one-third ofthe capacity on the pipeline.