FERC Monday approved a record $30 million agreement resolving claims that Energy Transfer Partners LP (ETP) and three affiliates manipulated physical natural gas prices at key Texas trading points from late 2003 through 2005.

This is the steepest penalty the Federal Energy Regulatory Commission has imposed in an enforcement action since Congress gave the agency enhanced enforcement authority under the Energy Policy Act of 2005.

The settlement calls for ETP to pay the U.S. Treasury $5 million within five days, and to set up a designated fund in the amount of $25 million to disgorge allegedly unjust profits to third-party entities that filed claims. An administrative law judge will oversee the fund. Any money remaining in the fund at the end will be forwarded to the Treasury.

In return, the FERC has agreed to dismiss all current claims against ETP with prejudice and terminate all investigations in the proceeding. Moreover, the settlement forever bars the Commission from bringing against ETP any and all claims arising out of the case [IN06-3].

In March 2008 ETP and affiliates reached a $10 million settlement with the Commodity Futures Trading Commission to resolve similar charges that they attempted to manipulate natural gas prices (see Daily GPI, March 19, 2008).

In addition to the civil penalty, the FERC settlement imposes a detailed compliance program on ETP, including written compliance standards; mandatory compliance training for employees directly involved with commodity trading; annual review of the compliance program; ongoing monitoring of ETP’s compliance program by its chief compliance officer; confidential reporting systems; disciplinary mechanisms to ensure enforcement of these standards; and procedures for conducting internal investigations of trading activities.

In July 2007 FERC accused ETP and affiliates of manipulating physical natural gas prices at the Houston Ship Channel (HSC) and Waha trading hub on various dates from December 2003 through December 2005 (see Daily GPI, July 27, 2007).

FERC at the time proposed potential civil penalties for ETP totaling $82 million — $79 million for the alleged manipulations at the HSC and $3 million for the alleged manipulations at Waha and Permian trading hubs. FERC also proposed disgorgement of $69.9 million, plus interest, in unjust profits.

In March the Commission approved a joint offer of settlement filed by its enforcement staff and ETP’s Oasis Pipeline and affiliates, which essentially closed the enforcement case against the companies without levying any financial penalties (see Daily GPI, March 2). Oasis and affiliates were accused of discriminating against nonaffiliated shippers in favor of affiliated shippers. FERC initially had proposed $15.5 million in civil penalties for Oasis and affiliates for alleged Natural Gas Policy Act violations of undue discrimination and preference.

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