ngi article on tw hearing ( after first day ) transwestern denies withheld capacity to boost negotiated deals
a transwestern pipeline executive yesterday dismissed allegations that the pipeline withheld firm transportation capacity bound for california from its recourse - rate shippers last winter in order to free up more capacity for contracts at substantially higher negotiated rates .
mary kay miller , vice president of rates and certificates , acknowledged transwestern may have had discussions and exchanged faxes ( prior to posting its available capacity ) with two shippers - - sempra energy and richardson products ii ltd . - - that subsequently entered into negotiated - rate transactions . but she stressed that requests for capacity by sempra energy and richardson were considered " moot " by the pipeline until after the available operational capacity was posted .
" even if they would have sent . . . a fax the day before " capacity became available , " it would have been irrelevant because there was no capacity posted " at that time , said miller . capacity requests that came in prior to jan . 31 , the day that available capacity was posted for february contracts on transwestern , were " null and void . " the only " relevant " ones were those that transwestern received on or after jan . 31 , she noted .
miller spent much of wednesday on the stand being quizzed by lawyers for ferc and producers about transwestern ' s methods for notifying customers about available capacity , the manner in which it chooses winning bids and about its pre - posting contacts with sempra energy and richardson .
it was the first day of a ferc hearing exploring charges that transwestern exercised market power in awarding negotiated - rate contracts that led to shippers being charged as much as $ 27 / mmbtu last february , far in excess of the pipeline ' s maximum allowed rate of 38 cents / mmbtu for firm transportation service to the california border . the commission proceeding yesterday focused on four negotiated - rate contracts of sempra energy and richardson for a total 45 , 000 mmbtu / d of service on transwestern during february and march .
richardson and sempra " clearly did not have any ' deal ' entitling them to the posted capacity before it was posted , " miller said in prepared rebuttal testimony . the two companies " had the right to the capacity only ' after ' they submitted their bids , ' after ' the posting period ended , ' after ' transwestern determined that no other bids were submitted , and ' after ' a contract was agreed upon between transwestern , richardson or sempra , " she noted .
despite claims made by ferc energy industry analyst barry e . sullivan to the contrary , " transwestern did not withhold capacity that otherwise could have been made available under recourse rates in order to make the capacity available under substantially higher negotiated rates , " miller testified .
sullivan , an analyst in the ferc office of markets , tariffs and rates ' ( omtr ) division of litigation , contends that transwestern threatened to withhold capacity unless shippers agreed to negotiated rates . in fact , he believes the pre - posting discussions between transwestern and shippers were intended to raise doubts about the availability of capacity at the maximum recourse rate , so that shippers might be more " willing to enter into negotiated - rate contracts above the recourse rate , in the hope of securing some of the capacity if and when [ it became ] available . " but miller counters that sullivan " offers not support for his claim . "
she noted that even sempra energy and richardson , in response to a data request by southern california edison , support transwestern ' s claims . both companies replied " no " when asked whether " any employee of transwestern or any transwestern affiliate ever indicated at any time that transwestern would not provide the capacity at the maximum tariff rate . "
the " capacity at issue was offered on transwestern ' s web site at the recourse rate in the exact same manner that all other capacity is offered on transwestern ' s web site at the recourse rate ; there was no prohibition , restrictions , limitation , condition or suggestion that a potential shipper could not bid for the capacity at the recourse rate ; and any potential shipper , including richardson or sempra , could have submitted a bid for the capacity at the recourse rate . "
sullivan contends that transwestern ' s motive for allegedly advancing negotiated - rate transactions at the expense of recourse - rate deals was pure profit . under questioning by thomas j . burgess of ferc ' s omtr , miller conceded that transwestern earned $ 1 . 8 million from sempra energy ' s contract in march , $ 1 . 3 million from richardson ' s march contract , and a " comparable " amount from richardson ' s february contract . she noted the pipeline received a " substantially higher " amount as a result of sempra ' s february contract , but she didn ' t provide an exact figure . ferc ' s sullivan estimated the pipeline ' s profit from the sempra february contract was more than $ 5 million .
sullivan said that much of the profits that wound up in transwestern ' s coffers would have gone to sempra energy and richardson if they have been able to acquire the capacity at recourse rates . but miller countered that the commission ' s negotiated - rate policy " does not require a minimum level of profit to shippers or contemplate any hindsight analysis of whether shippers could have gotten a better deal or made more profits . "
furthermore , she said the transwestern case shouldn ' t be used to consider changes to the negotiated - rate policy , as sullivan has suggested . this case " is the wrong forum for such an issue because modifying the negotiated - rate policy should only be done on an industry - wide basis so no pipeline or group of pipeline customers is competitively disadvantaged . "
ngi article on tw hearing ( after first day )
transwestern denies withheld capacity to boost negotiated deals
a transwestern pipeline executive yesterday dismissed allegations that the pipeline withheld firm transportation capacity bound for california from its recourse - rate shippers last winter in order to free up more capacity for contracts at substantially higher negotiated rates .
mary kay miller , vice president of rates and certificates , acknowledged transwestern may have had discussions and exchanged faxes ( prior to posting its available capacity ) with two shippers - - sempra energy and richardson products ii ltd . - - that subsequently entered into negotiated - rate transactions . but she stressed that requests for capacity by sempra energy and richardson were considered " moot " by the pipeline until after the available operational capacity was posted .
" even if they would have sent . . . a fax the day before " capacity became available , " it would have been irrelevant because there was no capacity posted " at that time , said miller . capacity requests that came in prior to jan . 31 , the day that available capacity was posted for february contracts on transwestern , were " null and void . " the only " relevant " ones were those that transwestern received on or after jan . 31 , she noted .
miller spent much of wednesday on the stand being quizzed by lawyers for ferc and producers about transwestern ' s methods for notifying customers about available capacity , the manner in which it chooses winning bids and about its pre - posting contacts with sempra energy and richardson .
it was the first day of a ferc hearing exploring charges that transwestern exercised market power in awarding negotiated - rate contracts that led to shippers being charged as much as $ 27 / mmbtu last february , far in excess of the pipeline ' s maximum allowed rate of 38 cents / mmbtu for firm transportation service to the california border . the commission proceeding yesterday focused on four negotiated - rate contracts of sempra energy and richardson for a total 45 , 000 mmbtu / d of service on transwestern during february and march .
richardson and sempra " clearly did not have any ' deal ' entitling them to the posted capacity before it was posted , " miller said in prepared rebuttal testimony . the two companies " had the right to the capacity only ' after ' they submitted their bids , ' after ' the posting period ended , ' after ' transwestern determined that no other bids were submitted , and ' after ' a contract was agreed upon between transwestern , richardson or sempra , " she noted .
despite claims made by ferc energy industry analyst barry e . sullivan to the contrary , " transwestern did not withhold capacity that otherwise could have been made available under recourse rates in order to make the capacity available under substantially higher negotiated rates , " miller testified .
sullivan , an analyst in the ferc office of markets , tariffs and rates ' ( omtr ) division of litigation , contends that transwestern threatened to withhold capacity unless shippers agreed to negotiated rates . in fact , he believes the pre - posting discussions between transwestern and shippers were intended to raise doubts about the availability of capacity at the maximum recourse rate , so that shippers might be more " willing to enter into negotiated - rate contracts above the recourse rate , in the hope of securing some of the capacity if and when [ it became ] available . " but miller counters that sullivan " offers not support for his claim . "
she noted that even sempra energy and richardson , in response to a data request by southern california edison , support transwestern ' s claims . both companies replied " no " when asked whether " any employee of transwestern or any transwestern affiliate ever indicated at any time that transwestern would not provide the capacity at the maximum tariff rate . "
the " capacity at issue was offered on transwestern ' s web site at the recourse rate in the exact same manner that all other capacity is offered on transwestern ' s web site at the recourse rate ; there was no prohibition , restrictions , limitation , condition or suggestion that a potential shipper could not bid for the capacity at the recourse rate ; and any potential shipper , including richardson or sempra , could have submitted a bid for the capacity at the recourse rate . "
sullivan contends that transwestern ' s motive for allegedly advancing negotiated - rate transactions at the expense of recourse - rate deals was pure profit . under questioning by thomas j . burgess of ferc ' s omtr , miller conceded that transwestern earned $ 1 . 8 million from sempra energy ' s contract in march , $ 1 . 3 million from richardson ' s march contract , and a " comparable " amount from richardson ' s february contract . she noted the pipeline received a " substantially higher " amount as a result of sempra ' s february contract , but she didn ' t provide an exact figure . ferc ' s sullivan estimated the pipeline ' s profit from the sempra february contract was more than $ 5 million .
sullivan said that much of the profits that wound up in transwestern ' s coffers would have gone to sempra energy and richardson if they have been able to acquire the capacity at recourse rates . but miller countered that the commission ' s negotiated - rate policy " does not require a minimum level of profit to shippers or contemplate any hindsight analysis of whether shippers could have gotten a better deal or made more profits . "
furthermore , she said the transwestern case shouldn ' t be used to consider changes to the negotiated - rate policy , as sullivan has suggested . this case " is the wrong forum for such an issue because modifying the negotiated - rate policy should only be done on an industry - wide basis so no pipeline or group of pipeline customers is competitively disadvantaged . "