In compliance with a major rate settlement approved by FERC inDecember, Kinder Morgan Interstate Gas Transmission LLC (KMI) lastweek reported it paid $32.6 million in refunds to customers on itsmainline and Buffalo Wallow system last month.

The refunds, which were disbursed on March 20, compensated thepipeline’s customers for the difference between the rates theyactually paid and those they would have paid had the settlementrates been in effect during the period of Aug. 1, 1998 through Dec.31, 1999. The settlement rates reflected a total cost of service of$109.7 million [RP98-117-012].

The refund payment comes only weeks after FERC slapped KinderMorgan with a $5.1 million civil penalty for gross violationsinvolving the marketing-affiliate standards under Order 497, whichrequires pipes and their marketing affiliates to functionindependently of each other. The Commission also ordered thecompany, which inherited the affiliate-abuse problems when itacquired KN Energy, to make refunds of $674,428 as part of aconsent agreement (See NGI, April 3, 2000).

The report revealed that KMI made refunds to about 70 customerslast month, including several of its affiliates. Some of thebiggest refunds went to KN Marketing L.P./ Rockies ($11.7 million),Midwest Energy Inc. ($5.5 million), KN Gas Services ($5.3 million),Wildhorse Energy ($2.2 million), Chevron U.S.A. Production Co.($1.4 million) and UtiliCorp United Inc. ($1.1 million). KinderMorgan was sole or part owner of three companies – KN Marketing, KNGas and Wilhorse – during the August 1998-December 1999 period. Ithas since sold some of the assets as part of its consent agreementwith FERC.

Susan Parker

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