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Williams to Pay $77.2M to Settle False Price Reporting Claims

The Williams Companies last week said it reached four separate agreements totaling $77.2 million to resolve pending claims and investigations related to the false reporting of natural gas prices and volumes to published indexes for a period that ended in the fall of 2002.

Under the terms of the independent agreements, Williams' power business (now Williams Power, formerly Williams Energy Marketing & Trading) will pay $50 million as part of a deferred-prosecution agreement with the Department of Justice; $15.6 million to settle a matter in California State Court in San Diego; $9.15 million in U.S. District Court in the Southern District of New York; and $2.4 million in U.S. District Court in Nevada, the Tulsa, OK-based energy company said.

The deferred-prosecution agreement is scheduled to expire after 15 months with no criminal prosecution of Williams or its power business, provided the company complies fully with the terms of the deal. Williams said it will pay the $50 million to the Justice Department in installments between now and mid-March 2007. The agreements in New York, California and Nevada are subject to court approval.

As a result of the settlements, Williams said it will record a $64 million pre-tax charge to its fourth quarter 2005 earnings.

In October 2002, Williams said it learned through an internal review that a few nonmanagement employees had reported inaccurate natural gas price and volume information to an industry newsletter. Williams turned over the results of the review to regulators and suspended reporting of gas trading information until it had put into effect procedures designed to ensure accurate reporting of price/volume information.

In July 2003, the Federal Energy Regulatory Commission approved Williams' new procedures, and Williams paid a $20 million penalty to the Commodity Futures Trading Commission to resolve claims that it knowingly gave false gas trading information to reporting firms in an attempt to manipulate the indexes of natural gas prices (see NGI, Aug. 4, 2003).

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