News April–June 2007
News Release: May 21, 2007 | View Printable PDF Version |
Docket No. IN07-25-000 |
Columbia Gulf Transmission Company agrees to pay $2 million civil penalty to resolve investigation of compliance with Commission orders
The Federal Energy Regulatory Commission today approved a Stipulation and
Consent Agreement requiring Columbia Gulf Transmission Company to pay a civil
penalty of $2 million to resolve an investigation into whether Columbia Gulf violated
Commission orders by failing to allow Tennessee Gas Pipeline Company to construct a
receipt point interconnection on a natural gas complex in Egan, Louisiana.
In accepting the Agreement, the Commission noted the importance of pipeline
interconnections to facilitate open-access transportation of natural gas and to maximize
the value of the nation's interstate pipeline network. The Commission also noted the
importance of compliance with Commission orders.
"There is no question that companies subject to the Commission's jurisdiction
must comply promptly and fully with the Commission's orders," Chairman Joseph T.
Kelliher said. "Failure to do so causes harm to the regulatory process and to the orderly
administration of our governing statutes."
Under the Stipulation and Consent Agreement, Columbia Gulf may not recover
the civil penalty amount from its ratepayers. The company must pay the United States
Treasury within ten days.
Columbia Gulf and Tennessee are co-owners of the Blue Water Project, a natural
gas complex that the two companies have jointly operated since 1972. Under the Blue
Water Project Operating Agreement, Tennessee operates the eastern portion and
Columbia Gulf operates the western portion, called the Western Shore Line. The
Western Shore Line terminates at the Egan complex where Columbia Gulf is responsible
for deliveries from the Western Shore Line to itself, to Tennessee and to two other
interstate natural gas pipelines. Columbia Gulf operates the Egan complex.
In October 2003, Tennessee proposed to Columbia Gulf a plan to construct an
interconnection at the Western Shore Line so that Tennessee could deliver gas to the Blue
Water Project from its Muskrat Line. When Columbia refused, Tennessee filed a formal
complaint with the Commission in March 2004.
In July 2005, the Commission issued an order allowing Tennessee to construct a
receipt interconnection on the Blue Water Project at Egan, Louisiana, as soon as
operationally possible. Commission policy requires open-access pipelines to allow
interconnections with other pipelines when certain conditions are met, and Tennessee's
interconnection was approved because it met all the applicable criteria for a pipeline-topipeline
interconnection.
A dispute over which company would operate the new interconnection resulted in
another order in July 2006 directing Columbia Gulf to provide the necessary taps for
Tennessee to complete the interconnection. The Commission also referred the matter to
the Office of Enforcement to determine whether Columbia Gulf's actions had violated or
were violating the Commission's prior orders.
The Office of Enforcement alleged that Columbia Gulf created unwarranted
obstacles and did not meaningfully work with Tennessee to allow the new
interconnection as directed by the Commission, and that Columbia Gulf's actions,
directed by senior management, substantially delayed completion of the interconnection
project. In entering into the settlement, Columbia Gulf neither admitted nor denied the
alleged violations.
The Commission's order states, "In light of the facts and circumstances, we
conclude the penalty and conditions specified in the Agreement provide a fair and
equitable resolution of this matter and are in the public interest."
Since January 2007, the Commission has approved eight settlements with natural
gas and electric entities with civil penalties totaling $30 million.
R-07-36
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