El Paso Corp. (ticker: EP, exchange: New York Stock Exchange (.N))
News Release -
El Paso Continues Development of Offshore Pipeline from Nova Scotia to New York and New Jersey
HOUSTON, TEXAS, September 13, 2001ŚEláPaso
Corporation announced that its subsidiaries, EláPaso Natural Gas Company and EláPaso Merchant Energy, will file reply briefs tomorrow with the Federal Energy
Regulatory Commission (FERC) that illustrate the lack of substance of each and
every allegation contained in the opening briefs submitted to FERC by the
California Public Utilities Commission (CPUC).
In separate briefs to be filed with FERC Chief Administrative Law Judge
Curtis L. Wagner, Jr., the EláPaso companies systematically demonstrate that EláPaso did not-indeed could not-exercise market power to drive up California
natural gas prices. The briefs further demonstrate that EláPaso complied fully
with applicable laws in conducting a capacity auction on the EláPaso Natural Gas
"The California parties' briefs merely continue the well worn and
unsubstantiated allegation that, because natural gas prices were high in
California during 2000 and early 2001, somehow the state was victimized by
market manipulation," said William A. Wise, president, chairman, and chief
executive officer of EláPaso Corporation. "In fact, it is inescapable that
a diverse set of market conditions has caused energy price volatility in
In their reply briefs, the EláPaso companies analyze the allegations raised
in the California parties' initial briefs and conclusively demonstrate, based on
evidence introduced at the hearing, that EláPaso did not contribute to high
natural gas prices in California. The briefs demonstrate the following:
- Extraordinary demand, not market power, caused high natural gas prices.
Despite the California parties' simplistic view that EláPaso must have exercised
market power because prices went up, the record affirmatively shows that price
increases were a legitimate reaction to supply and demand forces.
- EláPaso did not withhold pipeline capacity from the California market. EláPaso Natural Gas, as well as other pipelines delivering natural gas to
California, operated at full capacity during the time that California prices
were high. Nobody was withholding or restricting gas supply, and it is thus
clear that extraordinary demand caused high natural gas prices in California.
- Under FERC's regulations, EláPaso could not withhold pipeline capacity
from the market. Under FERC's regulations, on any day that capacity is not being
used by a firm customer, the pipeline is required to make that capacity
available to other customers. EláPaso Natural Gas complied with these
regulations and the California parties presented no evidence to the contrary.
- The California parties failed to identify any evidence regarding the
marketing affiliate issues raised in the CPUC's complaint that had not been
addressed by the FERC in its March 28 order. In that order, the FERC unanimously
concluded that the capacity auction on the EláPaso Natural Gas pipeline and a
discount granted to EláPaso Merchant Energy by an affiliated pipeline were in
full compliance with FERC regulations. As such, the affiliate abuse claims are
Judge Wagner is expected to issue his recommended decision on October 9.
"We are pleased that this phase of the proceeding is behind us and are
confident that Judge Wagner, the Commission, and a reviewing court will conclude
that the record inescapably demonstrates that EláPaso's actions were completely
proper and in compliance with the law," concluded Wise.
EláPaso Corporation is committed to meeting energy needs throughout the
United States and the world, with operations that span the energy value chain
from wellhead to electron. EláPaso Corporation is involved in every segment of
the natural gas industry, including production, gathering and processing, and
transmission. The company also provides merchant energy services, international
project development, energy financing, power generation, and telecommunications
services. EláPaso is focused on speeding the development of new energy sources
to address critical energy shortages across the globe. For more information,
please visit www.elpaso.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