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Missouri PSC Sues Energy Companies for Reporting False Prices

Missouri regulators have filed a lawsuit against nearly two dozen energy companies that buy, sell and trade natural gas in the state for knowingly reporting false price information to published indexes that the state claims led to significant overcharges to Missouri gas distributors during a three-year period that ended in October 2002.

The Missouri Public Service Commission (PSC) filed the lawsuit in early October in Jackson County Circuit Court in Kansas City, MO, alleging that the companies violated the state's antitrust statute. But Duke Energy got the case moved to federal court in the Western District of Missouri on Oct. 26. The Missouri PSC said it plans to respond to get the case moved back to state court.

From at least January 2000 through at least October 2002, the energy companies "conspired to knowingly and intentionally report false price information" to several published price indexes, including Inside FERC's Gas Market Report, Platts Gas Daily, Natural Gas Intelligence and Natural Gas Week, the Missouri PSC said in its lawsuit. It further alleged that the defendants engaged in illegal wash trades to "artificially increase trading volumes and thus to create a fictitious supply and demand for natural gas."

Because of the energy companies' alleged conspiracy and misconduct, "the prices charged to the LDCs for natural gas were increased, advanced, manipulated and controlled at artificially high and noncompetitive levels," the PSC said.

The regulatory commission seeks unspecified damages, which could run in the millions of dollars.

It contends that the energy companies' practices resulted in overcharges for several Missouri local distribution companies -- Laclede Gas, Fidelity Natural Gas, Atmos Energy Corp., Empire District Gas, Missouri Gas Energy and Union Electric Co.

The Missouri PSC's action stems from investigations conducted by the Commodity Futures and Trading Commission that cited and fined many of the same energy companies for submitting false volume and price information on natural gas trades to published indexes.

The companies named in the Missouri PSC lawsuit are Oneok Inc., Oneok Energy Marketing and Trading Co. LP, Kansas Gas Marketing Co., Aquila Inc., Aquila Merchant Services Inc., The Williams Cos. Inc., Williams Merchant Services Co. Inc., Williams Energy Marketing & Trading Co., Reliant Energy, Reliant Energy Services Inc., Western Gas Resources, Duke Energy Corp., Duke Energy Trading and Marketing Co. LLC, El Paso Corp., El Paso Merchant Energy LP, American Electric Power Co. Inc., AEP Energy Services Inc., CMS Energy Corp., CMS Marketing Services and Trading Co., CMS Field Services, Xcel Energy Inc., e Prime Inc. and Coral Energy Resources LP.

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