Federal Regulators to Hear El Paso Testimony

El Paso Corp., the largest U.S. pipeline company, will get a chance to argue before federal regulators that it didn’t limit natural gas supply to California during the state’s energy crisis.

The Federal Energy Regulatory Commission will hold oral arguments Dec. 2, Chairman Patrick H. Wood III said. The procedure has not been used since 1997.

The commission’s chief administrative law judge ruled last month that El Paso used “unlawful” market power from November 2000 to March 2001 to limit gas deliveries on a pipeline that supplies 40% of California’s gas.

Judge Curtis L. Wagner said in his ruling that El Paso violated federal regulations that required it to make its entire 3.3 billion cubic feet of capacity on California pipelines available to shippers. El Paso shut lines for unneeded repairs and failed to notify would-be pipeline users of all available capacity at a time when California’s gas supplies were unusually tight, he added.

The company has disputed the decision, saying it operated its pipeline below the maximum capacity for safety reasons.

The judge did not specify penalties. Wagner’s ruling followed months of hearings.

“Our fear is that what was a favorable ruling will be mitigated by a FERC that has in the past been blindly pro- industry,” said Christian Schreiber, an investigator with a California state Senate committee probing the state’s energy crisis.

Shares of Houston-based El Paso rose 57 cents, or 7.8%, to $7.90 on the New York Stock Exchange.