Houston, Texas, January 11, 2000—El Paso Merchant Energy Company, a business unit of El Paso Energy Corporation (NYSE:EPG), announced today that it has entered into agreements with Energy Management Inc. to purchase two 67-megawatt natural gas-fired electric generation plants located in Dartmouth, Massachusetts and Pawtucket, Rhode Island. El Paso will hold a 100-percent ownership interest in both power generation facilities and will perform all operations and maintenance following the close of the sales, which are planned for the first quarter of 2000.

"Purchase of these assets significantly enhances our existing merchant plant portfolio," said Greg G. Jenkins, president of El Paso Merchant Energy Company. "The demand for natural gas-fueled power generation is growing rapidly in the northeast. These plants are geographically positioned to help us meet the needs of this growth market, and this purchase is aligned with El Paso Merchant Energy's low-risk, disciplined, asset-oriented growth strategy."

"The Pawtucket and Dartmouth Power Plants have been outstanding performers over the last decade," said James Gordon, president of Energy Management Inc. "The sale of these two facilities realizes the value our company created while affording El Paso and the existing plant operating teams the opportunity to deliver efficient, clean electricity to consumers into the new century."

Energy Management Inc. is a privately held company and one of the leading independent power developers in New England. The company is the managing general partner and operator of new gas fired merchant plants in Dighton, Massachusetts, Tiverton, Rhode Island, and Rumford, Maine. The combined output of the three plants is approximately 700 megawatts.

With over $15 billion in assets, El Paso Energy Corporation provides comprehensive energy solutions through its strategic business units: El Paso Natural Gas Company, Tennessee Gas Pipeline Company, Southern Natural Gas Company, El Paso Field Services Company, El Paso Merchant Energy Company, El Paso Production Company, and El Paso Energy International Company. The company owns North America's largest natural gas pipeline system, both in terms of throughput and miles of pipeline, and has operations in natural gas transmission, gas gathering and processing, gas and oil production, power generation, merchant energy services, and international project development. 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.