April 15, 2002; El Paso Partners Advances on the Greed Gauge

The partnership apparently closed on a net amount of about $600 million of pipeline assets transferred to it by El Paso Corporation.  For the time being we assume the transfer was offset by new debt.  The goal is undoubtedly to sell new units to the public soon.  Those units will be poor investments in our opinion because the proceeds will essentially be used to purchase the new assets at full or fuller price while the seller will keep a disguised half interest through the general partner tax.

The tax rate increases with an announced increase in the quarterly distribution.  We update our Greed Gauge to take account of the announcement (see Chart on next page).

EPN has no employees as EP operates it.  Investors skeptical of placing complete trust with little recourse in the general partner might not be reassured by the disclosure of side investments by EP executives.  EP’s proxy statement tells of cashless investment of millions of dollars in a telecommunications scheme that was terminated early at a guaranteed profit to its investors.