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Columbia Pipes Hit with $1M Penalty, $9M Disgorged Profits

FERC last Thursday ordered Columbia Gas Transmission to disgorge $9 million in unjust profits for alleged violations of its parking and lending (PAL) service tariff between 1998 and 2003, and directed Columbia Gas and sister pipeline Columbia Gulf Transmission to pay a civil penalty of $1 million for violations related to their nominations and discount posting practices.

The penalties and disgorgement of profits were part of a stipulation and consent agreement between the Federal Energy Regulatory Commission's (FERC) Office of Enforcement and the pipelines, which FERC approved Thursday [IN09-3, PA03-16]. While concurring with the facts in the consent agreement, neither Columbia Gas nor Columbia Gulf admitted or denied that the practices represented a violation of their tariffs or agency regulations.

The enforcement investigation determined that Columbia Gas violated its PAL rate schedule by providing PAL services on days when Columbia Gas posted that the services were "not available." The practice allegedly took place from November 1998 through October 2003. To resolve the PAL probe, Columbia Gas was ordered to disgorge $9 million in profits within 30 days to its firm and interruptible gas transportation customers. Some of the disgorged amounts will go to local distribution companies (LDCs), which in turn would pass the amounts through to their ratepayers, FERC said.

Enforcement also found that the two Columbia pipelines allowed their affiliated LDCs, but no other transportation customers, to submit nominations to the pipelines through the transfer of non-electronic data interchange (EDI) flat files, instead of through file transfers in EDI format or through the Internet. EDI is the structured transmission of data between parties by electronic means.

FERC enforcement said that between September 1998 and August 2004, the Columbia pipelines violated Order 587-1 by allowing affiliated LDCs to exclusively submit flat file nominations, as well as running afoul of agency regulations that bar pipelines from giving customers preferential treatment.

Moreover Columbia Gas, for the period from January 2001 through September 2003, and Columbia Gulf, for the period from January 2001 through September 2004, did not properly post transportation discounts that they granted to their marketing affiliate, according to the FERC order.

The Commission noted that it was restricted in the penalties it could assess on the Columbia pipelines because some of their alleged violations predated the enactment of the Energy Policy Act of 2005.

The consent agreement bars the Columbia pipelines and their affiliates from trying to recover any part of the $1 million civil penalty or $9 million disgorgement of profits through any rate for services that are subject to FERC jurisdiction.

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