A producer group has asked FERC to identify the negotiated-rate transportation contracts that will be subject to refunds as a result of action the Commission took against Transwestern Pipeline last month. The Enron pipeline was ordered in mid-July to pay shipper refunds for excess negotiated-rate transportation charges levied during the California energy crisis, which at times reached 100 times the maximum regulated rate. The agency also stripped Transwestern of its authority to negotiate rates based on basis differentials for an entire year (See Daily GPI, July 18).
The producers’ plea follows an Aug. 1 request by Transwestern for FERC to clarify the methodology for awarding refunds, and for an extension of the deadline to make the refunds. In the July 17 order, the Commission ordered Transwestern to refund above-maximum rate revenues to firm shippers within 30 days, and to file a report with the agency listing the amount of revenues refunded to each shipper. Producers said they did not oppose Transwesterrn’s bid for a delay in the refunds.
The mid-July order was unclear on whether the refunds (profits collected above the maximum recourse rate) plus interest were limited to Transwestern’s negotiated-rate deals with Sempra Energy Trading Corp. and Richardson Products Co., or whether they extended to other negotiated contracts between the pipeline and BP Energy Co., Astra Power LLC and Reliant Energy Services, said Indicated Shippers, which included BP America Production and Conoco Inc.[RP01-507].
While the July 17 order “seems to include all the negotiated-rate contracts,” the producers said it “lends some confusion” on this issue. They asked FERC to clarify that Transwestern must refund all revenues above its maximum recourse rate that were collected under negotiated-rate transactions, not just those of the Sempra Energy and Richardson contracts that were cited in the mid-July order.
Furthermore, Indicated Shippers said Transwestern affiliates should not be entitled to the refunds. “Given the recent [FERC] staff initial report on market manipulation by Enron and its affiliates, of which Transwestern is one, the Commission should be reluctant to award any Enron/Transwestern affiliate for any other affiliate’s misdeeds,” the producers said.
“If a Transwestern affiliate is permitted to receive refunds from the refund pool, that money would simply be passed on to the Transwestern/Enron corporate ‘family’ and Transwestern would feel much less of the impact of the penalty for its ill-gotten gains.”
Indicated Shippers said they agreed with Transwestern’s plea to limit the refunds to firm shippers who had contracts with the pipeline with primary delivery point rights to California that were in effect when the Sempra Energy and Richardson deals were made in early 2001. This would restrict the refund pool to shippers with 1,107,100 MMBtud of firm capacity at the time. “This…would focus the remedy on the harm by limiting the refund to parties that were most affected by Transwestern’s preferential treatment to customers receiving special notice [of available capacity], and by Transwestern’s violations of its tariff and the Commission’s regulations and policy,” the producers noted.
If FERC should deny clarification, the producers requested rehearing of the issues.
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