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19

FERC upholds El Paso capacity contract but sets hearing

FERC on Wednesday rejected most charges of wrongdoing in a high-profile pipeline capacity contract...

Washington, 28Mar2001

 

FERC on Wednesday rejected most charges of wrongdoing in a high-profile pipeline capacity contract involving El Paso Natural Gas and affiliate El Paso Merchant Energy.

The commission unanimously denied a motion by the California Public Utilities Commission to abrogate the deal, dismissed charges that the bidding process was skewed in favor of the affiliate and determined that there was no violation of FERC's standards of conduct for affiliate relations.

As for the CPUC's claim that El Paso and/or El Paso Merchant enjoyed market power and used it to drive up the price of gas at the state border, FERC found the current record "incomplete" and ordered an administrative law judge to conduct a hearing on the matter and report back in 60 days.

 

El Paso Merchant last year signed a 15-month deal, which expires at the end of May, for 1.22 Bcf/d of capacity on El Paso into California. Prior to that, Dynegy Marketing and Trade controlled the capacity for about 2 years.

The practice of selling such a large volume of capacity to a single shipper drew considerable criticism from competing shippers, the CPUC and others. In the complaint, the CPUC said the deal raised issues of affiliate abuse, anticompetitive impact on the delivered price of gas and the wholesale electric market in California, and the effectiveness of certain capacity recall rights spelled out in a 1996 settlement.

El Paso and the marketing company repeatedly denied the charges, insisting the deal was above board.
Washington (Platts)--28Mar2001

 

FERC on Wednesday rejected most charges of wrongdoing in a high-profile pipeline capacity contract involving El Paso Natural Gas and affiliate El Paso Merchant Energy.

The commission unanimously denied a motion by the California Public Utilities Commission to abrogate the deal, dismissed charges that the bidding process was skewed in favor of the affiliate and determined that there was no violation of FERC's standards of conduct for affiliate relations.

As for the CPUC's claim that El Paso and/or El Paso Merchant enjoyed market power and used it to drive up the price of gas at the state border, FERC found the current record "incomplete" and ordered an administrative law judge to conduct a hearing on the matter and report back in 60 days.

 

El Paso Merchant last year signed a 15-month deal, which expires at the end of May, for 1.22 Bcf/d of capacity on El Paso into California.

Prior to that, Dynegy Marketing and Trade controlled the capacity for about two years. The practice of selling such a large volume of capacity to a single shipper drew considerable criticism from competing shippers, the CPUC and others. In the complaint, the CPUC said the deal raised issues of affiliate abuse, anticompetitive impact on the delivered price of gas and the wholesale electric market in California, and the effectiveness of certain capacity recall rights spelled out in a 1996 settlement. El Paso and the marketing company repeatedly denied the charges, insisting the deal was above board.

 

Source : Neftegaz.RU