With the ink barely dry on FERC’s settlement of the manipulation charges against Energy Transfer Partners LP (ETP), the Dallas-based energy company Tuesday expressed strong dissatisfaction with the way the agency’s enforcement staff handled the case.
“I continue to be disgusted by the manner in which the FERC [Federal Energy Regulatory Commission] enforcement staff administers the FERC’s enforcement powers,” said ETP CEO Kelcy L. Warren. “I believe that the FERC needs to take a long, hard look at how its enforcement staff conducts itself to ensure the natural gas industry receives the fairness and due process it rightly deserves.”
FERC spokeswoman Mary O’Driscoll declined to comment.
The overzealousness of FERC’s enforcement staff was evident in the proceeding against ETP’s Oasis Pipeline, Warren said. In November 2008 Administrative Law Judge Bruce L. Birchman dismissed the meat of the FERC enforcement case against ETP’s Oasis Pipeline — that it discriminated against nonaffiliated shippers in favor of affiliated shippers (see Daily GPI, Nov. 20, 2008).
In March of this year the Commission approved a joint offer of settlement, which essentially closed the enforcement case against Oasis and affiliates without levying any financial penalties (see Daily GPI, March 2). FERC originally proposed a $15.5 million penalty for Oasis, and the disgorgement of $267,122 in unjust profits (see Daily GPI, July 27, 2007).
Jerry Langdon, ETP’s compliance officer and a former FERC commissioner, complained about the changes to ETP’s compliance practices in the settlement. “We have had a strong regulatory compliance program in place for many years and we will continue to comply with all FERC rules and regulations. The settlement agreement should not require us to change our existing compliance practices,” he said.
ETP’s response comes one day after FERC approved a record $30 million agreement resolving claims that ETP and three affiliates manipulated physical natural gas prices at key Texas trading points from late 2003 through 2005 (see Daily GPI, Sept. 22).
This is the steepest penalty the Commission has imposed in an enforcement action since Congress gave the agency enhanced enforcement authority under the Energy Policy Act of 2005. Still it was a fraction of the $200 million sought by FERC in the enforcement actions against ETP and affiliates.
The settlement calls for ETP to pay the U.S. Treasury $5 million within five days, and to set up a designated fund in the amount of $25 million to disgorge allegedly unjust profits to third-party entities that filed claims. An administrative law judge will oversee the fund. Any money remaining in the fund at the end will be forwarded to the Treasury.
In return, the FERC has agreed to dismiss all current claims against ETP with prejudice and terminate all investigations in the proceeding. Moreover, the settlement forever bars the Commission from bringing against ETP any and all claims arising out of the case [IN06-3]. In July 2007 FERC accused ETP and affiliates of manipulating physical natural gas prices at the Houston Ship Channel and Waha trading hub on various dates from December 2003 through December 2005.
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