The Federal Energy Regulatory Commission has approved a stipulation and consent agreement ordering National Fuel Gas Supply Corp. to pay refunds to its firm storage and transportation customers who subscribed to service during a period in which the company illegally operated a storage well without the prior consent of the agency.

Separately, the Commission also okayed a stipulation and consent agreement that requires Ozark Gas Transmission System LLC and Arkansas Western Pipeline LLC, which merged with Ozark in February 2001, to make payments of $41,000-plus to the U.S. Treasury and the state of Missouri for having built eight minor pipeline-related projects before getting FERC clearance (IN02-7). The two interstate natural gas pipelines voluntarily disclosed the violations to FERC in March 2000.

Under the agreement with National Fuel, which was negotiated with FERC’s Market Oversight and Enforcement Section, the pipeline has agreed to refund $53,000 to storage and transportation customers on its system during the period of Jan. 1, 1998 through June 1, 2000. In addition, National Fuel has consented to notify the Commission during the next five years of all plans to construct new storage facilities or convert other facilities to storage wells, whether considered by the company to be jurisdictional or not (CP01-46).

National Fuel has been ordered to pay the refunds within 30 days. FERC has given the company 10 days to file a report that identifies all of the customers that will be owed refunds and the projected refund amount for each customer, including interest.

The low refund amount “is acceptable in settlement of this matter in large part because National Fuel’s violation does not appear to result in customers receiving services below the level for which they contracted,” the FERC order said. While customers were minimally affected, “payment of the refund is appropriate because our ability to regulate storage field operations, in particular, is diminished if pipelines fail to submit in advance construction and operation plans and obtain Commission authorization for those plans.”

The agreement resolves all claims against National Fuel with respect to operation of the illegal storage well (Well 7395), but FERC said it does not preclude it from taking further action related to the company’s other storage wells, fields and rates.

Under Ozark’s agreement with MOE, the company has voluntarily agreement to pay $40,000 to the U.S. Treasury to defray the costs of FERC’s investigation of the matter, $1,000 to the Missouri State Historic Preservation Office, as well as make payments to other state agencies to cover the costs, expenditures, time and inconvenience relating to an archeological site survey of one of the projects, the FERC order said.

The Commission has directed Ozark to make the payments within 30 days, and said that none of the monies could be recovered by the pipeline in a future rate proceeding.

Ozark also has agreed to establish a “Construction Project Clearance Procedure,” which spells out all of the requirements it has to meet when applying for and receiving environmental permits/approvals or other FERC authorizations in the future.

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