September 23, 2019

September 23, 2019

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September 20, 2019

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FERC Fines Columbia Gas $350,000 for Violating Auction Rules: Federal Energy Regulatory Commission

On July 30, 2015, the Federal Energy Regulatory Commission (FERC) approved a stipulation and consent agreement between the FERC Office of Enforcement and Columbia Gas Transmission LLC (Columbia Gas) for violations of Section 4 of Columbia Gas’s tariff governing auctions for firm capacity. Columbia Gas admitted the violations and agreed to a $350,000 civil penalty along with compliance improvements.

The facts in this matter are not in dispute. Columbia Gas is a natural gas company engaged primarily in interstate transportation and storage services subject to the jurisdiction of the Commission. Columbia Gas operates facilities located in twelve eastern states. During the course of an audit by the FERC Division of Audits, audit staff noticed that Columbia Gas’s auctions of firm capacity were not transparent and not on the publicly available section of the Columbia Gas’ Electronic Bulletin Board (EBB). In an unusual move, the Audits staff referred the matter to the Division of Investigations (DOI) on September 23, 2014. Audit staff generally resolves matters within the context of the audit and referrals to DOI are rare. In this case, Audit staff and the Office of Enforcement believed the violations were serious and merited a significant penalty. DOI opened a preliminary investigation covering the period January 1, 2010 through May 1, 2013.

Since 1993, Columbia Gas had posted notices of auctions on the public section of its EBB. In 2008 Columbia Gas started a new EBB with both a publicly available section and another that was password protected. Beginning in 2009, Columbia Gas began posting notices of firm capacity auctions on the password protected portion of the EBB instead of the publicly available section. Audit staff found that change made it onerous and confusing for many shippers and potential shippers to locate Columbia Gas’ capacity auctions.

In the settlement agreement, Columbia admitted that posting the firm capacity auctions on the password protected section of its EBB violated section 4 of its tariff by failing to properly post notice of the actions. The Commission did not make any findings of harm from the violations noting that no bidders affiliated with Colombia Gas participated in auctions that included capacity awarded at a discount. In fact, only 11 out of the 1,121 auctions during the investigative period resulted in capacity awarded at a discount.   In 2014, Columbia Gas changed its tariff such that available firm capacity was no longer awarded t auction and instead was on a first come, first served basis or through an open season.

© 2019 Bracewell LLP

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About this Author

Robert E. Pease, Energy, Attorney, Bracewell law firm
Senior Counsel

Bob Pease represents clients involved in the energy sector in CFTC and FERC regulatory, compliance and enforcement matters involving power, gas, and crude oil, as well as Dodd Frank implementation. Bob has more than 25 years of senior-level experience at CFTC and FERC handling energy-related policy, compliance and enforcement matters, most recently as Counsel to the Director in the Division of Enforcement with the CFTC. Before his time with the CFTC, Bob spent more than 20 years at FERC most recently as Director of Investigations. Bob was involved in some of the...

202-828-5824
Mark Lewis, Managing Partner, Energy Committee, Bracewell LLP
Managing Partner, Washington D.C.

Mark Lewis is a member of Bracewell's energy practice and serves on the management committee. He concentrates on energy-related projects, transactions and controversies.  His clients include oil and gas producers and marketers; oil and gas pipeline developers, owners, operators and investors; gas distributors; and large industrial energy consumers.

Mr. Lewis handles U.S. and global oil and gas pipeline development projects with respect to project structuring, contracting and governmental approvals.  He represents regulated pipelines, pipeline ownership interests regarding pipeline management issues, clients in transactions involving the acquisition of pipeline companies and pipeline assets, and shippers contracting with pipelines.

In his practice, Mr. Lewis provides legal counsel in contract negotiations involving operating, transportation, and gas purchase and sale agreements, and advises clients regarding regulatory aspects of contract/tariff and rate matters before the Federal Energy Regulatory Commission (FERC) and various state regulatory agencies.

202-828-5834