A FERC administrative law judge (ALJ) Tuesday granted enforcement staff’s request to issue subpoenas for several nonparty companies to appear or produce documents at the hearing of Dallas-based Energy Transfer Partners LP, which stands accused of manipulating physical natural gas prices at the Houston Ship Chanel (HSC) and Waha trading hub on various dates from December 2003 through December 2005.

The request to issue subpoenas was granted for the following nonparties: CenterPoint Energy Inc., Texas Eastern Transmission LP, Natural Gas Pipeline Company of America, Tennessee Gas Pipeline Co., ABN AMRO Inc., BNP Paribas Houston, BP America Inc., ConocoPhillips, Duke Energy Corp., Kinder Morgan Energy Partners LP, Louis Dreyfus Energy Services, Sempra Energy, Enterprise Products Partners LP and NRG Energy Inc. The subpoenas were issued concurrently with the order [IN06-3-003].

“The enforcement litigation staff has demonstrated good cause for the issuance of the requested subpoenas. It is well settled that the Commission may issue a subpoena to compel a nonparty in a Commission proceeding to attend as a witness at a deposition or hearing or to produce documents,” said ALJ Bobbie J. McCartney, who is presiding over the Energy Transfer hearing.

The Federal Energy Regulatory Commission “has the power to issue a subpoena if the inquiry is within the Commission’s authority, the demand is not too indefinite and the information sought is reasonably relevant to the Commission’s inquiry,” the ALJ said.

The Commission in May set for hearing the charges against Energy Transfer and several affiliates — Energy Transfer Co., ETC Marketing Ltd. and Houston Pipe Line Co. — for manipulation of physical natural gas prices at the HSC and Waha (see Daily GPI, May 16).

FERC’s investigation found that Energy Transfer allegedly violated the agency’s Market Behavior Rule, the anti-manipulation rule then in effect, when it artificially lowered the price for prompt-month gas at the HSC to the benefit of its physical and financial positions. By lowering the price, Energy Transfer reportedly depressed the Inside FERC’s Gas Market Report HSC index, published by Platts, on which the pricing of many physical natural gas contracts and financial derivatives is based.

The investigation also found that Energy Transfer allegedly depressed the price of daily gas at Waha, and violated the Natural Gas Policy Act by unduly preferring affiliated shippers and unduly discriminating against nonaffiliated shippers on its affiliate Oasis Pipeline for interstate gas transportation system from Waha in West Texas to Katy, TX, near Houston.

Based on a show cause order issued in July 2007, FERC is seeking to assess penalties on Energy Transfer of $97.5 million and require total disgorgement of $69.9 million in unjust profits (see Daily GPI, July 27, 2007). Commission enforcement staff in February asked the agency to increase the penalty amount to $107 million and disgorged profit amount to $74.9 million based on additional information that it uncovered during its investigation (see Daily GPI, Feb. 19).

Energy Transfer twice has asked FERC to permit it to have the case adjudicated de novo in district court. In December 2007 FERC rejected the company’s argument that it is entitled to de novo review in district court for any civil penalties assessed under the Natural Gas Policy Act, and held that the company instead may seek a U.S. court of appeals review of any civil penalty after the Commission makes a final ruling in the show cause proceeding (see Daily GPI, Dec. 21, 2007). The second request, which was filed in May, still is pending (see Daily GPI, May 28).

Energy Transfer has sought judicial review in the U.S. Court of Appeals for the Fifth Circuit, which in March declined to rule on the agency’s enforcement action against the company on the grounds that it lacked jurisdiction to intervene in an ongoing agency matter. The court granted FERC’s motion to dismiss Energy Transfer’s petition for review of the Commission’s action (see Daily GPI, March 20).

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