El Paso Corp. Seeks to Minimize Fine

El Paso Corp. sought Wednesday to minimize the scope of a potential fine after a judge concluded that the company’s trading unit unfairly won capacity on its pipeline to Southern California last year.

Chief Executive William Wise said the Houston-based company, owner of the longest U.S. natural gas pipeline system, will ask federal regulators to exonerate it or impose no fine.

If the Federal Energy Regulatory Commission accepts the judge’s conclusion of wrongdoing and then strips El Paso’s trading unit of the $185-million profit earned while it held pipeline capacity last year and this year, it “would be extraordinary and without precedent,” Wise said.

“There’s never been a penalty assessed more than $8 million or $10 million for an affiliate violation,” Wise said.

In a report Tuesday, FERC Chief Administrative Law Judge Curtis Wagner said El Paso trading and pipeline employees improperly exchanged information, a violation of federal rules known as “affiliate abuse.”

Wagner said he had found no proof of a more serious charge that El Paso boosted prices by withholding gas, as alleged by California utilities and public officials.

Natural gas prices increased fivefold in California in the first quarter. The high prices drove up electricity generation rates and cost the state, by some estimates, $9 billion. El Paso has said that high demand caused prices to soar, and that it complied with all laws.

On Wednesday, analyst Gordon Howald of Credit Lyonnais Securities upgraded his recommendation on El Paso’s stock to “add” from “hold” and set a 12-month target price of $55 a share.

William Maze of Banc of America Securities raised the stock to “buy” from “market perform” and set a 12-month target of $60.

El Paso shares rose $4.05, or 8.3%, to close at $52.80 on the New York Stock Exchange. They have fallen 26% this year.