FYI--More on El Paso.  gh

 -----Original Message-----
From: 	Butler, Janet  
Sent:	Tuesday, August 28, 2001 4:45 PM
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Subject:	El Paso Had Market Power



In a release from Natural Gas Intelligence according to FERC staff counsel, El Paso Natural Gas and El Paso Merchant Energy possessed market power during the summer of 2000 and violated FERC's marketing affiliate standards. The article states that El Paso had market power after May 2000 for at least two months when pipeline capacity constraints created a separate relevant geographic market in California. The evidence pointed to the now-infamous February 7 and 9, 2000 telephone conversations showing that the operating employees of El Paso Merchant, El Paso Natural Gas and Mojave Pipeline "were not functioning independently," according to staff counsel. 

The phone conversations took place just days before El Paso pipeline began its open season for 1.22 Bcf/d of firm, capacity on its system (bound for California), all awarded to El Paso Merchant.

Before and during the open season, EPME gained new information about the restructured long-term tiered discount on Mojave to Wheeler Ridge while potential non-affiliate shippers were not according to counsel. As a result, counsel find that EPME's group had an undue competitive advantage with the new Mojave discount generating a successful bid for the El Paso pipeline capacity. 

FERC Chief ALJ Wagner is expected to issue an initial decision in early October.