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FYI. This is the presentation that the Brattle Group---a consulting group=
=20 that Edison has long used on gas issues in California---gave last week to t= he=20 legislative committee investigating wholesale gas prices at the California= =20 Border. The day following this presentation (which was followed by a=20 presentation by the California PUC's FERC lawyer), the committee called El= =20 Paso and Dynegy to respond to Brattle's and the CPUC FERC lawyer's=20 presentations. Also attached is the best synopsis of the hearing that I've= =20 seen in the press. Best, Jeff ***************************************************************************= *** **************************************************** Competing evidence clouds Calif. investigation Prompted in part by the California Public Utilities Commission, the=20 California Assembly has been scrutinizing the role that interstate pipelines have played in the= =20 state=01,s current energy crisis. In the efforts to find a smoking gun, legislators have leane= d=20 heavily on a report prepared by The Brattle Group, a consultancy commissioned by utility= =20 Southern California Edison to dig up evidence of market power abuse. But the state=01,s biggest transporter of gas to California -- El Paso Natu= ral=20 Gas -- is not ready to take the rap. The pipeline has commissioned its own study, which i= t=20 recently presented as evidence that it has not circumvented any laws or regulation. As reported in both the trade press and national media, SoCal Ed and the CP= UC=20 are pointing the finger of blame at El Paso for alleged manipulation of California borde= r=20 prices through affiliate deals and capacity hoarding. And exhibit A in their case against = El=20 Paso is The Brattle Group=01,s study of the California market. Richard Zeiger, a spokesman for Assembly Member Darrell Steinberg, chairman= =20 of the California Assembly Judiciary Committee, told Gas Daily that The Brattle=20 Group=01,s market study proved that the surge in gas prices at the California border was not= =20 caused by normal market forces (GD 4/20). His remarks followed an oversight hearing during= =20 which Assembly members questioned Dynegy and El Paso officials about their involvement in= =20 the California market. El Paso presented a different version of events to the Assembly. In a repor= t=20 presented to legislators, a research group hired by El Paso concluded that a convergence= =20 of factors, not a conspiracy, caused the price run-up. Lukens Consulting Group, a Houston-based consultancy, was retained by El Pa= so=20 to conduct work on several fronts. In its study of the California market, Lukens=20 concluded that the increasing convergence of the gas and electricity businesses was one of the= =20 main culprits in the California gas price imbroglio. Assemblyman John Campbell, a Republican member of the oversight committee,= =20 said he "didn=01,t see any smoking gun" in either report. "We had our committee hearing, and we certainly had a lot on the Brattle=20 Study and a little on the Lukens study. To some degree, I=01,m not sure that the California=20 legislature is the best place to adjudicate the differences between these two studies," Campbell=20 said. "I believe FERC is looking at this situation " and it would seem to me that that=01,s the= =20 appropriate place." Campbell said that the CPUC had been prodding the California legislature to= =20 give support to its claims of market power abuse by pipelines. "It=01,s being pushed=20 basically by the Public Utilities Commission here, which believes that there was collusion" by=20 pipeline companies to push up gas prices in California, he said. The CPUC, Campbell suggested, sought satisfaction before the California=20 assembly when it had failed on the federal level: "There=01,s a concerted effort, not jus= t on=20 natural gas but on other things here in California, for entities and organizations here to point the= =20 finger elsewhere for the problems that we=01,re having in this state and I think you=01,re seein= g some=20 of that with the public utilities commission." Whether either report wins over the public incensed by high natural gas=20 prices is a different matter entirely. In the meanwhile, the dueling California market studies se= em=20 to have taken on a life of their own. The Brattle Group Study, for instance, has become the center of a heavily= =20 litigated effort to force FERC to compel the release of market data by California market=20 participants. Following on a request by SoCal Ed, which said it needed additional data to round out= =20 The Brattle Group report, FERC Chief ALJ Curtis Wagner issued subpoenas to the other three=20 major pipelines that serve the state as well as to Sempra Energy Trading. Several parties resisted FERC=01,s call for market information, saying the= =20 requested data contained commercially sensitive information. FERC allowed the discovery=20 process to move forward but only after attaching strict data protection rules restricting= =20 access to evidence (GD 4/23). Critics of the pipeline industry have already suffered one setback in their= =20 case. The commission recently dismissed the CPUC=01,s claim that El Paso rigged the auction of a= =20 large block of pipeline capacity in favor of affiliate El Paso Merchant Energy. In=20 addressing the California Assembly, representatives of Dynegy said that FERC=01,s recent ruling on th= e=20 California border controversy obviated the need for more investigation. The controversy, however, is far from over. FERC last month also ordered a= =20 hearing into whether El Paso Natural Gas and its affiliates manipulated capacity to driv= e=20 up the price of gas delivered into California (GD 3/29). That hearing is likely to take place= =20 this summer. (RP00- 241, et al.) NH ----- Forwarded by Jeff Dasovich/NA/Enron on 04/26/2001 05:23 PM ----- =09Douglas.Porter@sce.com =0904/19/2001 11:36 AM =09=09=20 =09=09 To: jeff.dasovich@enron.com =09=09 cc:=20 =09=09 Subject: Sacramento Pres Final 4_13_01(projected).ppt Per your request, attached are the presentation slides from yesterday. Douglas Porter, Senior Attorney Southern California Edison Company (626)302-3964 (626)302-3990(fax) douglas.porter@sce.com(See attached file: DRT2486.PPT) - DRT2486.PPT
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