El Paso Natural Gas Will Reportedly Pay Californians $1.7 Billion -- California Capitol Hill Bulletin - Volume 10, Bulletin 7 -- March 20, 2003

According to press reports on Thursday, March 20, El Paso Corporation preliminarily agreed to a $1.7 billion settlement over accusations that the company artificially restricted supplies of natural gas into California to inflate prices. The reports indicate that parties will file a motion asking that the Federal Energy Regulatory Commission to defer consideration of the FERC case, which Chairman Pat Wood had recently indicated was expected to be decided in the next few weeks. One press report

In a September 2002 ruling, a FERC judge found that El Paso had "withheld extremely large amounts of capacity that could have flowed to its California delivery points" between November 2000 and March 2001, and that the company had been a demonstration of the exercise of market power. California officials and utility companies had estimated that El Paso's actions cost the state between $3 billion and $4 billion in excess energy costs. The ruling found that the company substantially tightened the supply of gas" from at least one fifth of its pipelines at the California border, effectively delivering only 79% of its capacity during the California crisis.

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