posted on Thursday, May 24, 2007 12:11 PM by Tracy Davis

FERC Aggressively Responds To Natural Gas Violations

Over the past month, FERC has continued its heightened enforcement activity, approving two settlements with separate natural gas shippers who self-reported violations of the Commission's orders and regulations.  The settlements illustrate FERC's oft-stated preference for settling, rather than litigating, alleged violations.  FERC has now approved eight settlements, totaling $30 million, with natural gas and electric entities since the beginning of 2007.

On May 21, FERC approved a settlement with Columbia Gulf Transmission Company, in which the company agreed to pay $2 million to resolve an Office of Enforcement investigation into whether it violated orders allowing Tennessee Gas Pipeline Company to construct a receipt point interconnection on a Louisiana natural gas complex co-owned by Columbia Gulf and Tennessee.  In 2005, FERC issued an order approving Tennessee's proposal to construct a receipt interconnection at the complex, based on FERC's open-access policy.  The two companies subsequently disputed which one would operate the new interconnection, and in 2006, FERC attempted to settle the matter by directing Columbia Gulf to provide the taps necessary for Tennessee's interconnection.  FERC also referred the matter to the Office of Enforcement, which began an investigation into whether Columbia Gulf's actions violated FERC's orders approving the interconnection, and at the conclusion of its investigation, alleged that Columbia Gulf had substantially delayed and had created unwarranted obstacles to the project's completion.

The Columbia Gulf settlement comes on the heels of a May 9 order approving a stipulation and consent agreement with Calpine Energy Services, LP.  Calpine agreed to pay $4.5 million for entering into thousands of transactions in which it transported more than 150 billion cubic feet of natural gas on eight pipelines without holding title to the gas.  The settlement also resolved violations involving the misuse of pipeline capacity by Calpine affiliates to serve other affiliates and the improper movement of natural gas.  Calpine, which is currently in bankruptcy, received approval from the bankruptcy court for the settlement as a pre-petition unsecured claim.