El Paso Corp. Reaches Final Settlement

El Paso Corp., owner of the biggest U.S. natural gas pipeline system, completed a previously announced settlement with California and other Western states worth about $1.7 billion over allegations that it manipulated natural gas prices during the state’s energy crisis.

The Houston-based company, which reached a preliminary deal with the state in March, resolved claims that it drove up energy prices in 2000 and 2001 by curbing shipments on a pipeline from Texas to the West that carries 42% of California’s gas supply.

The final settlement calls for El Paso to make a $78.6-million cash payment upon signing the accord, the company said. It also will pay $45 million a year for 20 years, rather than provide an equivalent amount of natural gas as called for in the preliminary agreement.

The Los Angeles Department of Water and Power will receive about $25 million as part of the settlement.

The agreement also includes settlements with plaintiffs that weren’t included in the preliminary pact, an El Paso spokeswoman said. They include California Dairies Inc. and other cheese makers in the state.

El Paso said it admitted to no wrongdoing in the settlement.

The agreement must be approved by the Federal Energy Regulatory Commission and a state court in San Diego County, California Atty. Gen. Bill Lockyer said in a statement.

Mining company Phelps Dodge Corp. and other natural gas consumers in Arizona and New Mexico said this week that they would oppose provisions of the settlement that reserve capacity on the El Paso pipeline for California customers.