FERC last Thursday dismissed a complaint that alleged Texas Gas Transmission engaged in discriminatory and preferential behavior when it awarded transportation capacity to affiliate Gulf South Pipeline earlier this year, and it accused the two pipelines of attempting to manipulate the natural gas market.

"The Commission concluded that Texas Gas acted in accordance with the procedures set forth in [its] bid postings, and the complaint did not allege any actions by Texas Gas that would constitute market manipulation," the Federal Energy Regulatory Commission said in a summary of its decision in the case [RP07-473]. It further rejected a suggestion that it initiate a generic inquiry into pipeline capacity-allocation mechanisms and the capacity marketplace as a whole.

Houston-based National Energy & Trade LP (NET), which markets natural gas in several regions in the United States, filed the complaint in June, claiming that it was deprived of capacity on Texas Gas even though it believed it submitted a superior bid. It accused Texas Gas of failing to follow its FERC tariff and agency policy in awarding capacity to Gulf South and Sequent Energy Management LP, violating the Natural Gas Act by awarding capacity to Gulf South in a discriminatory and preferential manner, and engaging in market manipulation along with Gulf South. NET alleged that Texas Gas shared information with Gulf South that was not available to nonaffiliates.

Moreover, it claimed that Texas Gas and Gulf South together manipulated the market for transportation in order to permit Gulf South to collect $15.9 million more per year for the Texas Gas capacity than Texas Gas was permitted to charge nonaffiliated shippers under its FERC tariff. "Shippers like NET should not be at the mercy of Texas Gas's nonpublic 'backroom' NPV [net present value] determination procedures and preferential affiliate dealings," NET told FERC in its complaint.

The marketer asked FERC to order Texas Gas to immediately award NET's bid as the best bid in response to Texas Gas's capacity notice posted on Jan. 17 of this year; grant NET all rights it would have to the capacity it bid on for a term of one year or longer at the pipeline's maximum rate; cancel the "unlawful award" of capacity to Sequent and Gulf South; and order Gulf South to disgorge all profits on the capacity that it claimed was "improperly and illegally" obtained from Texas Gas.

©Copyright 2007 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.