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Monday, 23 September, 2002, 20:28 GMT 21:28 UK
Gas firm guilty over California crisis
El Paso logo over night skyline
El Paso's actions kep the lights off in California, the FERC says
US energy company El Paso illegally held back supplies of natural gas to drive up prices at the height of the 2001 California energy crisis, regulators say.

The Federal Energy Regulatory Commission's chief judge, Curtis Wagner, said the Texas-based company should be penalised for abusing its market power.

The FERC has been investigating El Paso and a group of other companies suspected of exacerbating the electricity shortages which triggered rolling blackouts from mid-2000 through 2001.

Natural gas is a common fuel for California electricity generating plants, and a massive hike in prices was a contributing factor in the state's crisis.

Holding back

According to Judge Wagner, El Paso "withheld extremely large amounts of capacity that could have flowed to its California delivery points".

Its agreements obliged it to send 3.29 billion cubic feet (bcf) through its pipelines into California each day, he said.

But instead the company moved an average of just 2.59 bcf a day, all the while withholding another 100 million cubic feet which could have made it into the state.

That, he said, showed the company not only had market power - which means enough clout to control the market in a product - but used it to its own advantage while hammering the California consumer.

"The new evidence produced in this phase of the case shows a clear withholding of substantial capacity during the relevant period," Judge Wagner wrote in a 23-page decision.

El Paso had no immediate comment.

But California's public utility regulator, together with generators Pacific Gas & Electric and Southern California - both of which were crippled by huge bills for natural gas during the crisis - say El Paso's actions cost Californians an extra $3.3bn (2.1bn).


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