Washington State

Office of the Attorney General

Attorney General

Bob Ferguson


OLYMPIA -- Attorney General Christine Gregoire announced today that El Paso Corp. will pay Washington state $23 million to resolve state claims that it manipulated market prices for natural gas and abused its position in the natural gas market.

The settlement is between El Paso Corp. and its subsidiaries and affiliates, and the states of Washington, Oregon, California and Nevada, as well as numerous private litigants and other parties.

The total cash settlement is $665 million. It will be paid over 20 years.

El Paso owns natural gas pipelines serving the Southwest and Southern California. It is one of several energy companies under investigation by the Attorneys General of Washington, Oregon and California for contributing to the 2000-2001 energy crisis.

El Paso owns and operates the pipeline that transports natural gas from southwestern fields to Southern California. Allegations against the company included claims that it drove up the price of natural gas by artificially reducing supply. A significant percentage of electricity in California is generated by natural gas. By unfairly driving up the price of natural gas, the price of electricity was also artificially inflated.

California and Nevada suffered the greatest harm since they are direct purchasers of natural gas from El Paso. Washington State had no direct purchases, but was harmed because its electricity prices were artificially driven up by the unfairly high gas prices.

"The exorbitant energy prices dealt a terrible financial blow to consumers throughout the West," Gregoire said. "The devastating impact only magnified the outrageousness of their wrongdoing."

While El Paso has admitted no wrongdoing, the Attorney General said today's agreement validates the states' concerns that energy suppliers manipulated market prices during the energy crisis.

Under the settlement, El Paso has also agreed to cooperate with the states' ongoing investigations into energy price manipulations.

El Paso is the second company to reach a settlement with the states.

The first settlement in the investigation was reached with Williams Companies, Inc. and the Williams Energy Marketing and Trading Company last November. Williams agreed to pay Washington $15 million over a period of three years.

"While I am pleased with the $38 million we will receive from these two companies, it isn't enough to provide what ratepayers in Washington deserve," Gregoire said. "Unfortunately I am not optimistic that we will be able to get restitution from Enron, which we believe was guilty of the greatest fraud and market manipulation."

Enron filed for bankruptcy protection in December, 2001.

Gregoire said no decision has been made yet regarding distribution of the settlement money. The settlements, she said, require the money to be used to benefit those consumers who were harmed by the wrongdoing.