Subject: RE: El Paso FERC Case
From: [email-masked]
To: [email-masked]
Date: Sat, 16 Jun 2001 17:42:42 -0700 (PDT)

A belated thanks for sending this.

 -----Original Message-----
From: 	JOHN KLAUBERG  [mailto:[email-masked]] 
Sent:	Tuesday, June 05, 2001 1:21 PM
To:	Mark.E.Haedicke
Cc:	Richard.B.Sanders; Robert.C.Williams; vsharp
Subject:	El Paso FERC Case

PRIVILEGED AND CONFIDENTIAL: SUBJECT TO ATTORNEY CLIENT AND OTHER PRIVILEGES

Mark:

I assume that you and Richard are very familiar with the day-to-day developments in the heavily publicized FERC case involving the investigation by FERC of El Paso's sale of pipeline capacity into the CA market to its merchant arm last year that CA officials have partly blamed for the spike in gas and power prices.  As you know, this is the case where the highest executives of El Paso recently were called to testify at FERC.

An article in this morning's New York Times (which begins on page 1), in discussing El Paso's significant earnings generated by the El Paso merchant arm from the pipeline capacity purchase, says that the parties with which El Paso hedged its position also made sizeable profits.  The article notes that about half of El Paso's trades were with Enron "according to people present at the briefings El Paso officials have given to California officials."  While this probably is not surprising in light of our size and breadth in the market, it nonetheless is made to sound somewhat sinister, and my sense is that it is just another potential barb for the CA officials to throw at us.  Since the article quotes a response from Mark Palmer (in which he suggests that Enron, in turn, likely would have resold the capacity and would not have realized the benefit of the rising market), I assumed that you were aware of it, but I thought I would err on the side of putting an extra e-mail in your in-box.

John

John Klauberg
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
212 424-8125
[email-masked]

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