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Kinder Morgan Pays Hefty Refunds to Pipe Customers

Kinder Morgan Pays Hefty Refunds to Pipe Customers

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

The refunds, which were disbursed on March 20, compensated the pipeline's customers for the difference between the rates they actually paid and those they would have paid had the settlement rates 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 Kinder Morgan with a $5.1 million civil penalty for gross violations involving the marketing-affiliate standards under Order 497, which requires pipes and their marketing affiliates to function independently of each other. The Commission also ordered the company, which inherited the affiliate-abuse problems when it acquired KN Energy, to make refunds of $674,428 as part of a consent agreement (See NGI, April 3, 2000).

The report revealed that KMI made refunds to about 70 customers last month, including several of its affiliates. Some of the biggest 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). Kinder Morgan was sole or part owner of three companies - KN Marketing, KN Gas and Wilhorse - during the August 1998-December 1999 period. It has since sold some of the assets as part of its consent agreement with FERC.

Susan Parker

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