PRICE information sought from natural gas companies in California

Saturday, May 19th 2001, 12:00 am
By: News On 6

WASHINGTON (AP) _ A federal regulatory agency late Friday directed natural gas companies selling in California to provide detailed information for better investigations of possible price gouging and market abuses.

The Federal Energy Regulatory Commission said it viewed the unusually high prices of wholesale natural gas in California as ``a matter of serious concern'' but didn't have enough information to determine if they are illegal.

It noted that the spot price of natural gas charged at the California border has been exceedingly high since December when it ranged between $11.79 and $18.80 per thousand cubic feet, compared to $4 to $7 elsewhere in the county.

The most recent prices at the California border exceed $9, more than twice the wholesale price in other parts of the country. Such a disparity over such a long period of time would not be expected in a competitive market, the agency said.

California officials have argued for months that FERC should intervene and more aggressively investigate high natural gas prices, which have been a major cause of some of the run-up in electricity costs in the state. Many of the state's power plants run on natural gas.

The order asks for a wide range of information at the end of each calendar quarter including volumes of gas sold, prices, transportation rates, daily operational pipeline capacity and volumes flowing in and out of the state.

Allegations of price gouging and market manipulation have been at the center of a hearing by a FERC administrative law judge all this week. The hearing will continue next week.

The case involves a major natural gas pipeline owned by the Houston-based El Paso Corp., which supplies Southern California.

California regulators, and two of the states financially troubled utilities, filed a formal complaint with FERC, alleging that manipulation by two El Paso subsidiaries _ one a gas marketer and the other an operator of the pipeline _ led to $3.7 billion in natural gas overcharges since March 2000.

El Paso Corp. has strongly denied the allegation.

For the past week, attorneys for El Paso have questioned witnesses from the California Public Utilities Commission in an attempt to disprove the charges.

The witnesses admitted they failed to consider some additional factors that could have affected prices in their analyses, but they did not back away from their conclusion.

In support of their argument, California officials have provided internal El Paso memos _ which have not been disclosed publicly _ that allegedly discuss market control in connection with gas flowing through the pipeline.

Administrative Law Judge Curtis Wagner has said the documents contain statements ``that could lead one to believe there was an abuse'' of pipeline capacity. He is not expected to make a ruling on the case until later this summer. A final decision on what action to take, if any, would be up to the full commission.