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Enserco Ordered to Pay $1.4M for Bidding, SMHT Violations

August 31, 2009
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FERC has ordered Enserco Energy Inc., a Colorado-based natural gas marketer, to pay $1.4 million to resolve claims that it violated the agency's open-access transportation rules.

The stipulation and consent agreement, which was negotiated between the Office of Enforcement (OE) and Enserco and approved by the Federal Energy Regulatory Commission, requires Enserco, a subsidiary of Black Hills Corp., to pay the penalty within 10 days for circumventing the competitive bidding requirements for long-term, discounted rate capacity releases and for violating the shipper-must-have-title (SMHT) requirements. It also requires Enserco to submit semi-annual monitoring reports to OE for a period of one year.

OE opened its investigation of Enserco after the company self-reported violations in December 2007. Enforcement staff said it found that Enserco improperly transported 13.9 Bcf of natural gas on 20.6 Bcf of discounted pipeline capacity acquired through flipping transactions. Flipping is a term that applies to transactions that avoid posting and bidding requirements for discounted rate firm capacity.

"The flipping transactions caused harm to natural gas transportation markets because they impeded transparency and denied other market participants an opportunity to bid for discounted, long-term releases of capacity. However, staff found no unjust profits related to these transactions," the FERC order said [IN09-24].

Enforcement staff said it also confirmed that Enserco violated the SMHT requirement by transporting approximately 7.8 Bcf of gas owned by Enserco on capacity held by others. The SMHT requirements stipulate that the owner of the natural gas being shipped and the capacity holder must be one and the same.

"Violations of the shipper-must-have-title requirement interfere with the Commission's oversight of natural gas markets and with the Commission's goal of market transparency. However, staff found no unjust profits related to these transactions," the order said.

Enserco is a full-service marketing firm in the western and Midcontinent regions of the United States and Canada with more than 350,000 MMBtu/d of interstate pipeline capacity, and storage in excess of 8 Bcf.

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