An energy trader has filed a lawsuit against Dallas-based Energy Transfer Partners LP and affiliates for alleged manipulation of the prices of natural gas futures contracts on the New York Mercantile Exchange (Nymex).
The trader, Richard Hershey, brought the lawsuit in the U.S. District Court for the Southern District of New York "on behalf of himself and all others" who purchased and/or sold natural gas futures and options contracts on Nymex between Dec. 29, 2003 and Dec. 31, 2005.
In addition to Energy Transfer Partners, the lawsuit names affiliates Energy Transfer Co., ETC Marketing Ltd. and Houston Pipe Line Co. The companies are alleged to have "manipulated natural gas prices by selling massive amounts of fixed-price natural gas for prompt month delivery at artificially low, noncompetitive prices at major natural gas trading hubs, including the Houston Ship Channel, Waha and Permian Hubs, and intentionally submitting price and volume trade information for their artificial natural gas trades to trade publications, like Platts' Inside FERC's Gas Market Report."
The charges mirror many of those brought by the Commodity Futures Trading Commission (CFTC) and the Federal Energy Regulatory Commission against Energy Transfer Partners and affiliates in late July (see NGI, July 30). FERC accused the company of manipulating the natural gas physical markets at the Houston Ship Channel and Waha trading hub, and is seeking up to $167 million in total penalties and disgorgement of unjust profits if Energy Transfer Partners is unable to successfully dispute the charges.
The CFTC filed a complaint in the U.S. District Court for the Northern District of Texas claiming that Energy Transfer Partners and affiliates attempted to manipulate the October 2005 and December 2005 Houston Ship Channel monthly index prices of natural gas published by Inside FERC's Gas Market Report.
The lawsuit comes only weeks after Energy Transfer Partners filed for rehearing of the FERC July show cause order, claiming that any penalties assessed against the energy company should ultimately be decided by a federal district court, not the Commission (see NGI, Sept. 3).
In the latest lawsuit, Hershey alleges that Energy Transfer Partners and affiliates sought to drive down gas spot prices and manipulate Inside FERC's published price index to "benefit defendants' natural gas physical and financial trading positions, including natural gas basis swaps held on electronic energy exchanges, such as the IntercontinentalExchange, which were tied to the price indexes at [Houston Ship Channel], Waha and Permian hubs published by...Inside FERC."
Hershey is seeking unspecified damages and has asked the court to certify his lawsuit as a class action.
Hershey apparently is no stranger to lawsuits. In September 2006, he filed a lawsuit in the same court against BP that claimed the oil giant manipulated crude oil prices by refusing to allow traders access to U.S. storage facilities. Hershey said he suffered damages caused by BP's refusal to open its storage facilities at Cushing, OK, between January 2003 and December 2004.
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