BP America Production Co. and affiliate BP Energy Co. have asked FERC to resolve what they believe is an “inconsistency” in an Oct. 31 stipulation and consent agreement negotiated with Transwestern Pipeline, which bars the pipeline from recovering a $550 million loan that it secured to help bail out its parent, Enron Corp., just weeks before it filed for bankruptcy last December.

Under the consent deal with the Commission, Transwestern agreed not to recover from ratepayers the $550 million loan that it entered into on Nov. 13, 2001 with Citicorp North American Inc. and JP Morgan Chase Bank, as well as the “interest cost of that loan or the cost of acquiring the loan or any other successor loan[s] used to retired the $550 million debt in any future Commission rate proceeding,” the BP companies said.

But “somewhat inconsistent” with that, the consent agreement then said FERC “reserved the right to determine, in any future Natural Gas Act Section 4 rate proceeding, whether the cost associated with any future refinancing of the $550 million loan was just and reasonable,” and thus recoverable from the pipeline’s ratepayers, they noted.

“BP has a substantial interest in, and will be directly affected by, the outcome of this proceeding,” the companies said, in asking FERC to allow them to “intervene out-of-time” in the case.

As part of the agreement, Transwestern neither admitted nor denied that any of its loans were entered into “imprudently,” or that it violated the Commission’s accounting regulations. The deal came three months after FERC issued an order in which it called into question the propriety of two emergency loans secured by Transwestern and former Enron pipeline, Northern Natural Gas, to aid their ailing parent (See Daily GPI, Aug. 5). The Commission became concerned about the loans — specifically Enron’s intention or ability to repay the pipelines — during a sweeping audit of the cash-management programs involving regulated utilities and pipelines and their parent companies, which the agency began last January.

After Enron filed for bankruptcy, Transwestern said its loan to its parent “was no longer deemed by Transwestern to be recoverable.”

Northern Natural, which is now owned by Berkshire Hathaway’s MidAmerican Energy Holdings Co., negotiated a similar consent arrangement with FERC in mid-August (See Daily GPI, Aug. 9). Northern Natural obtained a $450 million loan to help Enron in late 2001.

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