Distribution and marketing affiliates of Colorado-based SourceGas LLC have accused Kinder Morgan Interstate Gas Transmission (KMIGT) of unfairly holding onto nearly $1 million in natural gas that belongs to retail choice customers in Nebraska and Wyoming.

In a Section 5 complaint filed at the Federal Energy Regulatory Commission (FERC), SourceGas Distribution LLC and SourceGas Energy Co. (SGES) allege that KMIGT has refused to process volumetric prior-period adjustments (PPA) involving 326,669 Dth for more than six months from the date of the initial transportation invoice [RP09-579]. KMIGT’s tariff requires the pipeline to make PPAs, thus resolving any billing disputes, six months from the date of an initial transportation invoice, according to the complaint.

The SourceGas affiliates called on FERC to initiate an investigation into whether the adjustment practices of KMIGT in connection with resolving long-standing volumetric processing issues are unjust, unreasonable and/or unduly discriminatory.

“KMIGT’s refusal to process these certain volumetric PPAs allows KMIGT to keep gas supplies taken from firm shippers on KMIGT, namely SourceGas Distribution and SGES and other natural gas suppliers participating in retail choice gas programs in Nebraska and Wyoming administered by SourceGas Distribution and improperly rewards KMIGT’s unduly discriminatory behavior that enables it to keep these improperly obtained gas supplies,” the affiliates charged.

SourceGas Distribution owns the retail gas assets that were once the property of Kinder Morgan Inc., which exited the retail gas distribution business in 2007. Neither SourceGas Distribution nor its parent company are affiliated with Kinder Morgan.

An estimated 326,669 Dth of gas “belongs to the shippers but was taken and is currently being held by KMIGT as it continues to refuse to process the cancel/rebill PPAs…KMIGT may have sold this gas through operational sales, injected it into storage, cured imbalances of other shippers or performed a variety of other services with it,” the SourceGas companies said. A SourceGas executive estimated the current harm to retail choice customers at $916,000.

In certain cases, SourceGas companies noted that FERC has granted pipelines an extension of the six-month deadline to process volumetric PPAs. But “KMIGT refuses to file for any type of waiver…Under KMIGT’s apparent view, a pipeline is free to unilaterally refuse to seek a waiver where, for example, such refusal allows the pipeline to reap a windfall benefit from an uncorrected error by keeping gas supplies that do not belong to it. This ‘one-way street’ approach to pipeline tariff waivers is unduly discriminatory,” they said.

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