fw new york times article required reading food thought original message sellers emily sent tuesday march 27 2001 1 01 pm moran michael p dornan dari pavlou maria talcott jim bargainer david k crowley philip holtzman staci huber lee king jr frazier kyle candace mccoppin dorothy pryor tony raker colleen scott susan soldano louis wilkie kim subject fw new york times article required reading drew asked forward attached message article please take look article el paso inartful internal documents creating kind fun microsoft recent antitrust unpleasantness know control way people think issues market behavior price strategy etc however remind clients precise careful way talk particularly write issues like us clients keep problems like el paso microsoft mind put pen paper fingers keyboard thanks df forwarded drew fossum et section deal use gas pipeline stirs dispute competition richard oppel jr lowell bergman 03 26 2001 new york times page 1 column 4 c 2001 new york times company early last year el paso natural gas company took bids two dozen companies right ship enough natural gas pipeline texas new mexico meet one sixth daily demand energy starved california winner el paso sister company el paso merchant energy company buys sells trades natural gas bidding close el paso merchant offered twice much capacity companies bid total bits pieces pay much california officials pressing complaint el paso federal energy regulatory commission say answer simple state contends el paso merchant help sister company saw transaction way manipulate price natural gas using control pipeline capacity according sealed documents obtained new york times part filings federal case executives el paso merchant said internally deal would give control gas markets including ability influence physical market benefit company financial positions el paso executives called accusations fanciful formal response california complaint said state grossly distorted company documents quoting words phrases context dispute opens window important debate oversight natural gas industry fuels growing share nation electric power plants issue whether current safeguards enough prevent anticompetitive abuses marketing trading natural gas whether federal regulators adequately enforce existing rules particular many industry officials question whether regulated pipeline companies able favor unregulated sister companies trade natural gas free maximize profits 200 000 miles interstate pipelines crisscross country moving natural gas canada southwest producing regions fuel factories power utilities heat houses long ago many parts country excess pipeline capacity experts say several regions including california new york new england face constraints demand soars gas fuel power plants california state officials utility executives said documents federal case el paso actions proof state energy crisis stemmed ill conceived deregulation plan price manipulation profiteering market maker pipeline said loretta lynch president california public utilities commission struggled cope skyrocketing power prices supply shortages el paso sets price california ms lynch said intentional affected price said everything related heat electrical power prices state california complaint federal agency contends el paso merchant hoarded capacity refused attractively price unused capacity pipeline state also charges el paso natural gas pipeline owner incentive spur competition offering discounts users two companies corporate siblings state said el paso violated federal natural gas statutes prohibit anticompetitive behavior sealed filings el paso case indicated company expected make money widening basis spread difference gas bought producing basins texas new mexico one end pipeline price delivery southern california turned spreads widened enormously last year price gas soared california adding costs wholesale electricity pushed biggest utilities near bankruptcy california utilities paid 6 2 billion competitive prices wholesale electricity last 10 months state officials estimated utilities allowed recoup costs customers cost 1 000 cubic feet gas typically less 1 higher california end pipeline spot prices state rose almost 50 texas new mexico price december executives parent company el paso corporation accusations market manipulation ludicrous high gas prices california el paso executives said interviews easily explained soaring demand poor credit standing state utilities failure utilities retain pipeline capacity store enough gas winter idea anybody holding back california really ridiculous said clark c smith president el paso merchant operations north america el paso customers though agreed california officials pacific gas year expected 700 million north america alone latest quarterly report el paso attributed profits part commodity market trading margins enhanced power price volatility particularly western united states critics contend el paso set exploit conditions according sealed filings feb 14 2000 day el paso merchant awarded pipeline capacity executives made presentation william wise chief executive parent company laying rationale bid presentation outlined termed strategic advantages including control total physical markets ability influence physical market benefit financial hedge position according sealed filings passages suggested el paso expected deal give sway market trading actual volumes gas support financial transactions entered parties limit risk every one cent increase spread gas prices presentation said el paso merchant stood make additional 2 4 million heading challenges according sealed filings presentation stated storage needed help manipulate physical spreads adding overall transport storage cost april 14 according sealed filings el paso merchant president time greg g jenkins wrote memorandum mr wise involving update directors meeting later month memorandum stated make money two ways 1 increase load factor 2 widen basis spread language appears suggest el paso merchant would profit increasing gas flow pipeline load factor increasing difference gas could bought one end could sold end basis spread interview mr smith el paso merchant executive said unit prices profits bulk gas sales california locked months advance company could benefit rising prices spot market otherwise mr smith declined provide details money made pipeline deal financial terms transactions locked prices ahead time addition mr smith said nearly el paso merchant pipeline capacity used every day prices spiked late last year capacity withheld increase prices company respond last week request discuss information sealed documents el paso merchant filing federal regulators said california complaint misconstrued incorrectly interpreted termed snippets data report article others california energy problems part joint effort pbs series frontline result documentary later year photo el paso natural gas pipeline passes near topock ariz dispute bidding use spurred debate oversight industry john gurzinski new york times pg al 7 chart boom times operating revenue net income soared last year el paso corpor 2 3 ation sells transports trades natural gas graphs operating revenue net income el paso corporation source company reports pg al 7 chart spike prices spot price natural gas produced permian basin west texas doubled last year price power generators paid gas delivered southern california rose almost 10 fold state regulators say gap evidence market manipulation graph showing spot price gas delivered southern california spot price gas bought permian basin september march source gas daily pg al 7 copyright 2000 dow jones company inc rights reserved