The Missouri Public Service Commission (PSC) said last Thursday it will pursue penalties against Missouri Pipeline Co. (MPC) and Missouri Gas Co. (MGC) for alleged price discrimination and assisting an affiliated company in gaining a competitive advantage over other energy marketers in violation of PSC regulations and their own tariffs.

The PSC vote was 3 to 2. PSC staff filed a complaint last year against MPC and MGC, both natural gas transporters operating in east central Missouri. Based upon evidence presented in the case, the PSC determined that MPC and MGC failed to maintain separate facilities and personnel from an affiliate, Omega Pipeline Co. Omega was a gas marketer that provided marketing services to several entities that obtained gas through MPC or MGC.

According to testimony, the president of MPC and MGC, David Ries, was also president of Omega. PSC staff alleged Ries used his position as head of these companies to negotiate arrangements between the companies in a way that favored Omega over other companies that were shipping gas on the MPC and MGC pipelines. Staff alleged MPC and MGC improperly shared confidential information with Omega.

"That same information was not shared with other shippers on the pipelines, including other entities that were acting as marketing agents in competition with Omega," the PSC said. "Having access to that sort of information provided Omega with a competitive advantage over the other marketing agents who shipped gas on MPC and MGC, allowing Omega access to market information and price information of competitors, other shippers could not access."

MPC and MGC tariffs provide that "the lowest transportation rate charged to an affiliate shall be the maximum rate that can be charged to nonaffiliates." PSC staff claimed that the rates charged to shippers should be adjusted to reflect the discounts offered to Omega. The commission agreed.

As transporters of gas, MPC and MGC are not sellers of gas. They collect a fee for transporting the gas that various shippers purchase from suppliers and move through the pipelines. Shippers on the pipeline would include other public utilities, municipal gas distribution systems and large industrial users who purchase their own gas supply.

The circuit court will review the PSC's decision and determine whether to assess penalties against MPC and MGC. If penalties are assessed, the court would determine the amount. Any money paid would, by law, go to the state public school fund.

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