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FERC Subpoenas Issued in Energy Transfer Manipulation Case

June 30, 2008
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A FERC administrative law judge (ALJ) last Tuesday granted enforcement staff's request to issue subpoenas for several nonparty companies to appear or produce documents at the hearing of Dallas-based Energy Transfer Partners LP, which stands accused of manipulating physical natural gas prices at the Houston Ship Chanel (HSC) and Waha trading hub on various dates from December 2003 through December 2005.

The request to issue subpoenas was granted for the following nonparties: CenterPoint Energy Inc., Texas Eastern Transmission LP, Natural Gas Pipeline Company of America, Tennessee Gas Pipeline Co., ABN AMRO Inc., BNP Paribas Houston, BP America Inc., ConocoPhillips, Duke Energy Corp., Kinder Morgan Energy Partners LP, Louis Dreyfus Energy Services, Sempra Energy, Enterprise Products Partners LP and NRG Energy Inc. The subpoenas were issued concurrently with the order [IN06-3-003].

"The enforcement litigation staff has demonstrated good cause for the issuance of the requested subpoenas. It is well settled that the Commission may issue a subpoena to compel a nonparty in a Commission proceeding to attend as a witness at a deposition or hearing or to produce documents," said ALJ Bobbie J. McCartney, who is presiding over the Energy Transfer hearing.

The Federal Energy Regulatory Commission "has the power to issue a subpoena if the inquiry is within the Commission's authority, the demand is not too indefinite and the information sought is reasonably relevant to the Commission's inquiry," the ALJ said.

The Commission in May set for hearing the charges against Energy Transfer and affiliates -- Energy Transfer Co., ETC Marketing Ltd. and Houston Pipe Line Co. -- for manipulation of physical natural gas prices at the HSC and Waha (see NGI, May 19).

Based on a show cause order issued in July 2007, FERC is seeking to assess penalties on Energy Transfer of $97.5 million and require total disgorgement of $69.9 million in unjust profits (see NGI, July 30, 2007). Commission enforcement staff in February asked the agency to increase the penalty amount to $107 million and disgorged profit amount to $74.9 million based on additional information that it uncovered during its investigation (see NGI, Feb. 18).

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