HOUSTON, TEXAS, August 23, 2001-El Paso Corporation (NYSE: EPG) announced that its subsidiaries El Paso Natural Gas Company and El Paso Merchant Energy will file briefs tomorrow with the Federal Energy Regulatory Commission (FERC) establishing conclusively that the complaint filed by the California Public Utilities Commission (CPUC) is groundless and should be dismissed.

In separate briefs to be filed with Chief Administrative Law Judge Curtis L. Wagner, Jr., the El Paso companies demonstrate that neither the factual record developed at hearing nor the applicable law support the CPUC's allegations.

"The briefs demonstrate unambiguously that El Paso violated no laws or regulations. Based on a detailed analysis of the facts and law, all elements of the CPUC's complaint have been refuted," said William A. Wise, president, chairman, and chief executive officer of El Paso Corporation. "Natural gas price increases in California were caused by market forces-not the withholding of pipeline capacity as alleged by the CPUC. The record is clear and uncontroverted that as California natural gas prices rose, 95 to 100 percent of the El Paso Natural Gas pipeline system was being utilized-the opposite of withholding."

In March 2001, the FERC, in a unanimous decision, rejected allegations that El Paso violated the FERC regulations that govern interactions between a pipeline and its marketing affiliate. At the hearing before Judge Wagner, the complainants failed to bring forth facts that the full Commission had not already evaluated when it rejected the CPUC's affiliate abuse allegations. The record demonstrates that El Paso Natural Gas' February 2000 capacity auction did not favor its affiliate over other bidders and that a discount on an affiliated pipeline was discussed in strict compliance with applicable rules. The FERC analyzed the substance of these discussions in March and concluded that the discussions were in compliance with the FERC regulations. Moreover, the availability of a discount was publicly advertised on the Internet fully three and one-half months before the FERC regulations required the discount to be advertised.

The record is unambiguous that the allegations of abuse of market power-which specifically charge that El Paso Merchant Energy withheld capacity to drive up natural gas prices-are fantasy. During the time when natural gas prices increased sharply, the uncontroverted evidence shows that the El Paso Natural Gas pipeline system was being pushed to its physical limitations and on average ran at 95 percent of its available capacity. In other words, the pipeline was essentially full, and indeed on many days, El Paso Natural Gas customers used 100 percent of the pipeline's available capacity.

In addition, the evidence demonstrates that El Paso Natural Gas complied fully with the FERC regulations that required capacity to be made available to the public on any given day when El Paso Merchant Energy or any other shipper was not utilizing it. El Paso's undisputed compliance with these regulations makes it impossible, both legally and literally, to withhold capacity from the market.

Most telling is that natural gas consumption in California between May and December 2000 was approximately 20 percent higher than the average of the same months for the past four years. This unprecedented increase in demand, which pushed available pipeline capacity to the absolute limit, was the principal cause of higher gas prices in California. Market manipulation played no role whatsoever.

When you step back from the rhetoric and apply settled legal principle, it is clear that the CPUC has not met its burden of proof, and its complaint should be dismissed. I am confident that once the law and facts are fully analyzed, El Paso's actions will be found to be appropriate as a matter of law," Wise concluded.

An initial decision by Judge Wagner is expected by October 9, 2001. That decision will be subject to review by the full Commission and by the appellate courts thereafter.

El Paso Corporation is committed to meeting energy needs throughout North America and the world with operations that span the energy value chain from wellhead to electron. The company is focused on speeding the development of new energy sources to address critical energy shortages across the globe. Visit El Paso at 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 actual results.