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FERC Denies Marathon's Expansion 2002 Service Rate Complaint Against Trailblazer Pipeline

The Federal Energy Regulatory Commission (FERC) said it has turned down Marathon Oil's negotiated rate complaint against Kinder Morgan's Trailblazer Pipeline Co. The Commission found that Trailblazer did not violate Commission policy and regulations in effect when it held its open season and executed the contracts for the Expansion 2002 service.

Marathon had filed a complaint in late March 2005 against Trailblazer alleging that the rates charged under two of Marathon's Expansion 2002 negotiated rate transportation contracts are the product of "Trailblazer's exercise of market power," which would be in violation of the Commission's Alternative Rate Policy Statement, the Natural Gas Act (NGA), the Commission's regulations and Trailblazer's tariff (see NGI, March 28). Marathon also alleged that the rates charged under these service contracts were "unduly discriminatory."

Marathon had requested the Commission to direct Trailblazer to disgorge and return all revenues collected under those contracts in excess of the applicable maximum recourse rates, plus interest. Marathon also requested that the Commission invalidate the existing negotiated contracts and require Trailblazer to provide service in the future at the current recourse rate or at the lowest existing negotiated rate charged any Expansion 2002 shipper.

In FERC's finding, the Commission said it found "insufficient justification" to initiate further action under NGA to invalidate and change the negotiated rate in the Expansion 2002 contracts.

"For these reasons, we find that it is in the public interest to deny Marathon's complaint," FERC said. "Absent a compelling reason, the Commission does not believe it should second-guess the business and economic decisions between knowledgeable business entities when they enter into negotiated rate contracts."

In addition, the Commission also denied Marathon's motion requesting that FERC order Trailblazer to admit or deny, specifically and in detail, each material allegation contained in Marathon's complaint.

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