NGI's Daily Gas Price Index 
published : August 31, 2001
ALJ Advocates Money Settlement in El Paso Dispute 
FERC Chief Administrative Law Judge Curtis Wagner Jr. yesterday "strongly encourage[d]" parties to reach a monetary settlement in the high-profile case in which California regulators have accused El Paso Natural Gas and El Paso Merchant Energy Co. (EPME) of illegally manipulating natural gas prices in California and committing affiliate violations. 
The parties should give "serious consideration to disposing of this case by a negotiated settlement," Wagner said in an order late Thursday, adding that it "would be in the interest of all" concerned. The pipeline capacity contracts at issue in the case "[have] been terminated for some time now; natural gas prices are down; and possible remedies, should abuse of market power or affiliate standards be found to exist, is not before the chief judge for decision, at least not at this point in time," he said. 
Both sides "will agree that this case is extremely complex and controversial, and will be a very difficult one for the Commission to decide regardless of the initial decision's findings, and it is almost certain that there will be appeals [of] the Commission's decision," Wagner noted. "This means that a final determination in this case is a long time in the future." 
However, "should a substantial monetary settlement be reached now, the people of California will benefit much earlier and perhaps much better than [from] a continuation of this litigation. The people of California deserve a quick end to this litigation and a settlement will provide them with a fair solution now." 
He believes the parties would be "wise to work out a solution to their disputes that they can live with and know the outcome of, rather than take a chance on what a judge, the Commission and the courts may find." However, this "admonition...is not to be construed in any way that [I] will decide this case one way or the other," Wagner said, adding that he "has not and will not reach a decision" until he has reviewed and digested all briefs and proposed findings filed in the case. 
Wagner presided over the hearing this summer exploring allegations that EPME intentionally withheld capacity from the market to drive up delivered prices for gas in California beginning in mid-2000, and that El Paso pipeline violated the Commission's affiliate standards by rigging the bidding process to favor affiliate EMPE during a February 2000 open season. EPME was awarded 1.22 Bcf/d of capacity on affiliate El Paso pipeline, which was more than one-third of the total capacity on its line. The 15-month contracts for the capacity expired in May. 
In the event parties cannot reach a resolution, Wagner has extended the date for parties to submit reply briefs by one week to Sept. 14, given that the "magnitude" of the case is "somewhat overwhelming." He noted that he still "will make every effort to issue [an] initial decision on or before Oct. 9" in the case.