HOUSTON, TEXAS, May 14, 2001—The California Assembly Subcommittee on Energy Oversight majority is wrong. The rise in California natural gas prices is not attributable to El Paso, but is attributable to the fact that demand for gas has far outstripped supply. Evidence presented at the Subcommittee hearings shows that El Paso has consistently utilized its pipeline capacity to ship natural gas to California and has never restricted supply. Although the Subcommittee majority report has not been made public, it is clear, based on accounts of the report and recently uncovered documents, that the subcommittee hearing was a sham.

El Paso has recently obtained, through discovery in a proceeding before the Federal Energy Regulatory Commission, correspondence between staff for the subcommittee and the paid litigation consultant for Southern California Edison (SCE). This communication reveals that the subcommittee majority's conclusions were pre-determined to blame El Paso for California's failed energy policies. The Subcommittee majority was working hand-in-hand with, and relying on, SCE's consultant, the Brattle Group, in their so-called analysis. In communications between the subcommittee staff and SCE's consultant, it is clear that SCE's consultant assisted in preparing questions for the hearing and that the subcommittee staff requested assistance from SCE's consultant in preparing the final report. That the subcommittee majority never intended to conduct an objective investigation is clear from a communication between the subcommittee and the consultant which occurred after two days of hearing. After listening to three senior El Paso officials, the subcommittee staff conceded that El Paso responded "well" to the subcommittee majority's questions. But rather than write an objective report based on the testimony, the staff went on to ask SCE's consultant for help in "rebutting" El Paso's testimony.

"We are shocked that the subcommittee delegated its responsibilities to SCE's consultants," said Norma Dunn, senior vice president of Communications and Government Affairs. "We voluntarily met with subcommittee staff and testified before the subcommittee in good faith, under the false premise that the subcommittee was interested in seeking the truth. Now we learn that the subcommittee was working at the direction of SCE's litigation consultants to support SCE's litigation position. We are particularly concerned that after coordinating the questions to be asked, the Brattle Group testified before the subcommittee as if it were an independent group. It is obvious that the Subcommittee hearings were a charade that was orchestrated from the beginning. Final conclusions were drawn before we had an opportunity to testify and then the final report was leaked to the press instead of provided to us, so that we would not have an opportunity to react.

"We are pleased that we will finally have the opportunity to present the facts about our participation in California's natural gas markets on May 14 in a hearing before the Federal Energy Regulatory Commission. We are confident that once the facts are presented, El Paso will be vindicated," Dunn said.

El Paso has been doing business in the state for over 50 years. It is committed to helping address the real concerns about California's natural gas markets: That constraints on natural gas infrastructure in the state have limited the supply of gas during a time in which demand has risen dramatically.

• Last week, two El Paso subsidiaries announced separate open seasons to determine customer interest in pipeline expansions in California.
  • Mojave Pipeline Company's Sacramento Valley Project would provide incremental transportation capacity from Topock, Arizona to the Antioch and Sacramento areas.
  • El Paso Natural Gas Company is proposing to expand its existing southern California system.
• In addition, in March, El Paso Natural Gas announced its willingness to expand its pipeline system from Texas to California.
• Similar projects on El Paso's other pipelines will increase access to critical gas supply regions from Canada to the Gulf of Mexico.

El Paso Corporation, the largest and most broadly based natural gas company in the world, spans the energy value chain from wellhead to electron. With an enterprise value in excess of $50 billion, El Paso is a leader in every phase of the natural gas industry. The company owns and operates a significant portion of the North American natural gas delivery grid, operates the fastest growing, most sophisticated energy merchant group, and is the nation's third largest natural gas producer. El Paso, a leader in risk management techniques, is focused on maximizing shareholder value, transforming existing markets, and speeding the development of new markets. Visit El Paso at www.elpaso.com.

View the attached documented correspondence between the California Assembly Subcommittee staff and Southern California Edison paid litigation consultant, the Brattle Group.

View the attached FERC hearing summary.

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.