HOUSTON, TEXAS, December 21, 2000—El Paso Energy Corporation (NYSE:EPG), through its spokesperson, Norma F. Dunn, today issued the following statement regarding two lawsuits that were filed on December 18 in California alleging a conspiracy between certain El Paso affiliates and certain California utilities:

"It is our usual policy to refrain from commenting on pending litigation; however, in light of the attempts made by plaintiffs' attorneys to garner wide-spread publicity for these lawsuits, we feel it is necessary to issue a public and unequivocal denial of their claims. Neither El Paso Energy Corporation nor any of its affiliates have been or are now engaged in any illegal activities, alone or in combination with any other parties, to increase energy prices or create energy shortages in California. Claims that El Paso has caused or contributed to the present energy crisis in California are false, and the recently filed lawsuits have no factual or legal basis. A simple review of publicly available information reveals the inaccuracy of many of the allegations."

The facts described in the letter dated December 13, 2000, from El Paso Energy president and chief executive officer William A. Wise to the Federal Energy Regulatory Commission illustrate that El Paso Energy has not engaged in conduct that is alleged to have contributed to the recent sharp increase in California natural gas prices. The letter, available at http://www.epenergy.com/press/linked/ceolettertoferc.pdf, explains that, commencing well before the recent upswing in natural gas prices, El Paso had limited its opportunity to profit from such increases by putting in place financial hedges designed to protect against falling prices. Dunn emphasized that this hedging belies the assertion that El Paso had anticipated the recent increase in natural gas prices, much less been involved in causing it. "Similarly, the lawsuits' claims of a conspiracy overlook, misrepresent, and misinterpret evidence and events that contradict the contrived conspiracy theory and render it totally unbelievable," she said.

"As to the charge that Merchant Energy withheld its capacity to drive up California gas prices, commencing before the recent price increases and throughout this period, virtually all of that capacity that has been physically available has been utilized to move gas to California," Dunn added. "The capacity of California's own in-state facilities to receive gas is not physically sufficient to accept much more gas than has been shipped."

In his December 13 letter, Wise expressed El Paso's commitment to help alleviate California's current energy crisis and identified specific steps that El Paso is willing to take toward that end. The letter also pointed out that when the shortages first became apparent, El Paso demonstrated its desire to be part of the solution, not the problem, by voluntarily operating its only gas-fired merchant electric generating plant on an uneconomic basis at times to help meet the demand for power.

"We deplore this attempt by plaintiffs' attorneys to advance their cause by taking advantage of the media focus on California's unfortunate circumstances," Dunn stated. "As virtually all knowledgeable parties have publicly recognized, the present energy shortages result from the concurrence of a variety of circumstances, including unusually warm summer weather followed by high winter demand, low gas storage levels, poor hydro-electric power conditions, maintenance downtime of significant generating facilities, price caps that discouraged power movement from out-of-state into California, etc." She concluded by saying that El Paso intends to respond to the California lawsuits in court, refuting with independent evidence all claims that it played any illegal role in California's current crisis, and that El Paso expects to prevail in that litigation.

With over $21 billion in assets, El Paso Energy Corporation is one of the largest integrated natural gas-to-power companies in the world. El Paso Energy not only owns North America's largest natural gas pipeline system, but also has growing operations in merchant energy services, power generation, international project development, gas gathering and processing, and gas and oil production. On May 5, the stockholders of both El Paso Energy and The Coastal Corporation overwhelmingly voted in favor of merging the two organizations. The merger is expected to close in the fourth quarter of this year, concurrent with the completion of regulatory reviews. Visit El Paso Energy's web site at www.epenergy.com.

This release includes forward-looking statements and projections, made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The company has made every reasonable effort to ensure that the information and assumptions on which these statements and projections are based are current, reasonable, and complete. However, a variety of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release. While the company makes these statements and projections in good faith, neither the company nor its management can guarantee that the anticipated future results will be achieved. Reference should be made to the company's (and its affiliates') Securities and Exchange Commission filings for additional important factors that may affect actual results.