FERC Thursday rejected Energy Transfer Partners LP’s request for rehearing and stay of an order setting for hearing charges that it manipulated the natural gas markets at the Houston Ship Channel (HSC) and Waha, TX, trading hubs.
This was the second time that the Dallas-based company sought rehearing and/or stays of Federal Energy Regulatory Commission decisions. Last December the Commission rejected Energy Transfer’s argument that it was entitled to de novo trial in district court for any civil penalties assessed under the Natural Gas Act (NGA), and held that the company instead could seek U.S. court of appeals review of any civil penalty after FERC makes a final ruling in the show-cause proceeding (see Daily GPI, Dec. 21, 2007).
In its latest plea, which was filed in late May, Energy Transfer requested that the agency reconsider and stay a May 15 order, which set for hearing the allegations that Energy Transfer and several affiliates — Energy Transfer Co., ETC Marketing Ltd. and Houston Pipeline Co. — manipulated physical natural gas prices at the HSC and Waha trading hub on various dates from December 2003 through December 2005 (see Daily GPI, May 16). FERC responded in the negative to both requests.
The May order also set for hearing the issues of whether affiliates Oasis Pipeline LP, Oasis Pipeline Co. Texas LP and ETP Texas Pipeline Ltd. violated certain regulations under Section 311 of the Natural Gas Policy Act (NGPA) including unduly discriminating against nonaffiliated shippers and unduly preferring affiliated shippers; charging rates in excess of the Commission-approved fair and equitable rates, and, if so, the amount of unjust profits due shippers; and failing to file an amended operating statement in violation of agency regulations [IN06-4].
FERC Chief Administrative Law Judge (ALJ) Curtis Wagner Jr. ruled that the manipulation charges against Energy Transfer and affiliates and the allegations against Oasis Pipeline LP and affiliates were different and should be considered in two separate hearings.
Absent a stay of the May 15 order, Energy Transfer said it would be irreparably harmed. The company further said that both the NGA and NGPA required that its potential civil liability be adjudicated in federal district court, not in a FERC ALJ hearing. The court would decide whether any civil penalties are warranted and, if so, the amount, the company said.
“We find that ETP is not irreparably harmed by having to proceed with the administrative hearings. ETP’s due process rights are preserved through the Commission’s adjudicatory proceedings and, in the case of the NGPA penalty issues, ETP will receive a de novo review in federal district court. Further, ETP is entitled to court review of any final NGA civil penalty assessment order through an appeal to the U.S. court of appeals. Additionally, we find that a stay in these proceedings would not be in the public interest,” the FERC order said.
In July 2007 FERC issued a show cause order accusing Energy Transfer and affiliates of market manipulation, with potential civil penalties totaling $82 million — $79 million for the manipulations at the HSC and $3 million for the manipulations at Waha and Permian trading hubs (see Daily GPI, July 27, 2007). The Commission also proposed disgorgement of $69.9 million, plus interest, in unjust profits. This includes $67.6 million for manipulation in the HSC and $2.2 million for manipulation at Waha and Permian.
In February FERC enforcement proposed that the agency increase the civil penalty against Energy Transfer by $25 million to $107 million and raise the unjust profits that the company would be required to disgorge to $74.9 million in the event it is found guilty of manipulation of gas prices. The proposed penalty increase was based on FERC staff’s claim that it uncovered additional manipulation by ETP that it was not aware of last July (see Daily GPI, Feb. 19).
The Commission also is seeking to revoke Energy Transfer’s blanket certificate to sell natural gas for one year. This would require the company to get Commission approval for all jurisdictional sales of natural gas.
For Oasis Pipeline’s alleged NGPA violations, the Commission proposes that the company pay $15.5 million in civil penalties for undue discrimination and undue preference, and $500,000 for failure to file an amended operating statement. The Commission also is proposing that Oasis disgorge $267,122, plus interest, in unjust profits.
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