FERC last Monday approved separate settlements with subsidiaries of Dominion Resources Inc., Nicor Inc. and NiSource Inc., which require them to pay a total of $8.1 million in civil penalties and customer refunds to resolve charges that they provided preferential access to market-sensitive storage information in violation of the Commission’s standards of conduct.

The three companies conceded that their employees shared information with employees of their affiliates and favored customers with commercially sensitive natural gas storage inventory intelligence, FERC said. This non-public information had commercial value because it helped traders anticipate gas storage transportation volumes, which would affect gas prices and operational decisions, the agency noted.

Under the separate settlements, Dominion Transmission Inc., Dominion Resources and Dominion Energy Clearinghouse agreed to refund $4.5 million to storage customers and pay a $500,000 civil penalty. NiSource’s Columbia Gas Transmission Corp. agreed to pay a civil penalty of $2.5 million, while Nicor’s Northern Illinois Gas Co. consented to pay a civil penalty of $600,000. The monetary fines were assessed under the Natural Gas Policy Act, and “represent a relatively rare instance in which the Commission may impose civil penalties,” the agency noted.

The pipeline companies were charged with improperly disclosing, for extended periods of time, their non-public daily injection and withdrawal volumes for previous days to customers or other industry participants. “The information communicated was potentially helpful to understanding and anticipating gas price movements, Nymex natural gas futures price movements, and gas price differentials between production and consumer markets,” FERC said in a press statement. The information also “was potentially useful to pipeline company customers because it provided clues regarding pipeline operating dynamics.”

This activity by the three pipeline companies violated the Federal Energy Regulatory Commission’s standards of conduct and rules, which prohibit regulated companies and their affiliates from showing undue preference.

The settlement states that Dominion Transmission passed on its non-public storage inventory information to a risk group employee of Dominion Resources, who in turn forwarded the information to a gas trader in Dominion Energy Clearinghouse. The gas trader then provided the information to other industry participants, the agency said.

Specifically, the Dominion companies were charged with violating FERC’s prohibition against regulated companies providing preferential communication of pipeline information to a marketing affiliate, the Commission noted.

Nicor passed on non-public storage inventory information to one of its customers, while Columbia Gas Transmission relayed storage inventory information to three of its customers, according to FERC. As part of its settlement, Columbia Gas Transmission has agreed to record all conversations between its customer service representatives and its customers for a period of one year.

In a related development, FERC last Monday issued a notice of technical conference and request for written comments regarding the reporting of natural gas storage inventory information. The conference will explore whether the Commission should require increased reporting of storage inventory data to provide greater transparency and prevent improper exchanges of storage-related information.

The technical conference, which is scheduled for Sept. 28 at FERC headquarters, “was prompted by the information contained in the agreements that suggests that a web of improper contacts regarding non-public storage inventory information permeates parts of the natural gas industry,” FERC said.

APGA Applauds FERC Action

The American Public Gas Association (APGA), which represents municipal gas utility companies, sent a letter to FERC Chairman Pat Wood last week applauding the Commission’s action. “The Commission took important and forceful steps this week to improve the fairness and effectiveness of the competitive natural gas market,” said APGA President Bert Kalisch. “Through this successful investigation by the Office of Market Oversight and Investigations (OMOI), it is again made clear that some market participants are willing to obtain and exploit nonpublic information to gain a competitive advantage in the energy market.”

APGA also said it supports the Commission’s plans for a technical conference on the industry’s access to storage information and FERC’s interest in having pipeline companies make more storage data public. “For several years, APGA has observed the market’s often exaggerated reaction to the EIA weekly storage report, and accordingly has advocated for improvements in the weekly survey — including issuance of more timely production data (which is currently under consideration by EIA).

“APGA agrees with the Commission that ‘the bearing that storage inventories appear to have on commodity markets and pipeline operations counsel in favor of more complete and consistent and comprehensible posting by pipeline companies of their storage inventories than the Commission currently requires.'”

APGA noted that public gas companies rely heavily on publicly available storage and pricing information. It is critical, APGA said, that everyone in the industry has “simultaneous and timely access to storage information in order to diminish unwarranted market volatility and the incentive for bad actors to financially gain from early access to such data.”

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