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I am curious on what basis FERC is ordering the "renegotiation" of the gas pipeline allocation contracts. Because California "needs" it?

Basically, yes.

Long ago, El Paso entered into contracts with customers outside of California to deliver as much as gas they ever needed on the pipeline, and whatever was left over was available for California. That wasn't a problem, because California wasn't using that much.

Now, California demand has soared and it was getting disproportionately hurt. Because FERC retains regulatory authority over these interstate pipelines, it found that this was "unjust and unreasonable", which is the finding necessary to order changes.

El Paso doesn't care. It probably welcomes the chance to renegotiate contracts in a tight market. If anything, they'll make more profit. It's California's neighbors who are getting screwed, but that's what happens when we give the government the power to interfere with the market.

In a free market, of course, market forces would have already reacted to build a new pipeline into California to serve demand, but regulatory roadblocks have slowed that. El Paso still would like to build more capacity, and will if the politicians and bureaucrats get out of the way.

Thanks for the elaboration.

I had always understood that the U.S. Constitution gave congress the power to "regulate Commerce ...among the several States" in order to prevent one state from dealing unfairly with another - punitive tariffs at the border and that sort of thing.

Furthermore, Article I, Section 8 requires that "...all Duties, Imposts and Excises shall be uniform throughout the United States;" to prevent the federal govenment itself from favoring one state over another.

Now it seems that we have the feds doing exactly that: Favoring California over New Mexico and Arizona, and "impairing the Obligation of Contracts" to boot.

You probably know better than I whether El Paso will object to this or not, but it seems that they have several constitutional grounds for fighting this if they choose.

In a free market, of course, market forces would have already reacted to build a new pipeline into California to serve demand, but regulatory roadblocks have slowed that. El Paso still would like to build more capacity, and will if the politicians and bureaucrats get out of the way.

Natural gas has been deregulated for years. Are you suggesting it's just as phony as all the other "deregulation" scams?

Mr. Ackerman described the lawsuits by Mr. Lockyer as "frivolous" and politically motivated, saying that the attorney general had failed to produce "anything to back up" the accusations he has made.

Apparently Mr. Ackerman is describing this bogus grandstanding lawsuit as if it is uncharacteristic of the California AG. It seems that he is unfamiliar with Mr. Lockyer, who is incapable of any other kind of legal action.