FERC has imposed a more than $700,000 civil penalty on two subsidiaries of Michigan-based DTE Energy for violation of the agency’s capacity release regulations and the misclassification of firm transportation and park and loan agreements.

The stipulation and consent agreement, which was negotiated with the Federal Energy Regulatory Commission (FERC) Office of Enforcement, calls for DTE Gas, a gas utility, to pay a penalty of $15,000 for engaging in flipping, and for Washington 10 to pay a civil fine of $725,000 for misclassifying 32 firm transportation, storage and 72 park and loan agreements as intrastate rather than interstate. Washington 10, one of DTE’s storage facilities in Michigan, also agreed to disgorge $2.5 million in unjust profits, plus interest.

Both DTE Gas and Washington 10 admitted to the violations, according to the FERC order [IN13-10].

Flipping is the repeated short-term release of discounted-rate capacity to two or more affiliated replacement shippers on an alternating monthly basis to circumvent competitive bidding requirements.

From September 2001 through March 2006, DTE Gas released a total of 17,755,000 Dth of capacity to WPS Energy Services Inc. (now Integrys Energy Services Inc.) and its affiliates, according to the consent order. Between March 2001 and October 2002, DTE Gas also released capacity on an alternative monthly basis at less than the monthly rate to four other sets of affiliated customers: BP Canada Energy Marketing Corp. and BP Canada; Duke Energy T&M LLC and Duke Energy Fuels LP; Reliant Energy and affiliates; and Dynegy Gas Transportation Inc. and Dynegy Marketing and Trade.

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