ngi article on tw ruling ngi ' s daily gas price index
published : october 29 , 2001
alj clears transwestern of market power charges
a ferc administrative law judge has found no improprieties , nor evidence of the exercise of market power in negotiated rate contracts between transwestern pipeline and two shippers on its system , which resulted in the shippers being charged as much as $ 27 / mmbtu last february , far in excess of the pipeline ' s allowed transportation rate of 38 cents / mmbtu ( rp 97 - 288 - 009 ) .
alj jacob leventhal had only one fault to find , and that was with transwestern ' s method of posting capacity . the judge said , and transwestern agreed , to modify its tariff " so that all posting , bidding and award procedures are set forth in a separate provision with an appropriate caption " on its internet bulletin board . shippers had said that reviewing capacity on the transwestern web site was " a tortuous process . "
indicated shippers claimed transwestern ' s inadequate capacity posting and award procedures did not provide all interested parties with an opportunity to bid for the capacity that was available .
while " both indicated shippers and ( ferc ) staff find it curious that set ( sempra energy trading ) and richardson ( products co . ) were the sole bidders on the contracts awarded to each of them . . . curiosity does not translate into proof , " the judge said . witnesses in the expedited hearing testified no bids were considered in advance of the capacity posting . the judge subsequently found the capacity was awarded in a manner consistent with transwestern ' s tariff .
similarly , levanthal could find no evidence that transwestern exercised market power in negotiating the rates with shippers or withholding or threatening to withhold capacity . the capacity was available at recourse rates , and the shippers knew those rates were available . " staff ' s arguments really are criticisms of the posting and award procedures , but do not demonstrate the exercise of market power . "
the two shippers said they made a business decision to propose the " index - to - index " formula that produced the higher rates , rather than take the recourse rate " to minimize any risk on transportation options . " the index - to - index formula refers to taking the difference between the daily published commodity prices at two different points and subtracting to get the transportation rate between them . in this case the two points were the san juan basin and the socal needles delivery point .
the case was set for expedited hearing last summer by the commissioners acting on staff recommendations .
ngi article on tw ruling
ngi ' s daily gas price index
published : october 29 , 2001
alj clears transwestern of market power charges
a ferc administrative law judge has found no improprieties , nor evidence of the exercise of market power in negotiated rate contracts between transwestern pipeline and two shippers on its system , which resulted in the shippers being charged as much as $ 27 / mmbtu last february , far in excess of the pipeline ' s allowed transportation rate of 38 cents / mmbtu ( rp 97 - 288 - 009 ) .
alj jacob leventhal had only one fault to find , and that was with transwestern ' s method of posting capacity . the judge said , and transwestern agreed , to modify its tariff " so that all posting , bidding and award procedures are set forth in a separate provision with an appropriate caption " on its internet bulletin board . shippers had said that reviewing capacity on the transwestern web site was " a tortuous process . "
indicated shippers claimed transwestern ' s inadequate capacity posting and award procedures did not provide all interested parties with an opportunity to bid for the capacity that was available .
while " both indicated shippers and ( ferc ) staff find it curious that set ( sempra energy trading ) and richardson ( products co . ) were the sole bidders on the contracts awarded to each of them . . . curiosity does not translate into proof , " the judge said . witnesses in the expedited hearing testified no bids were considered in advance of the capacity posting . the judge subsequently found the capacity was awarded in a manner consistent with transwestern ' s tariff .
similarly , levanthal could find no evidence that transwestern exercised market power in negotiating the rates with shippers or withholding or threatening to withhold capacity . the capacity was available at recourse rates , and the shippers knew those rates were available . " staff ' s arguments really are criticisms of the posting and award procedures , but do not demonstrate the exercise of market power . "
the two shippers said they made a business decision to propose the " index - to - index " formula that produced the higher rates , rather than take the recourse rate " to minimize any risk on transportation options . " the index - to - index formula refers to taking the difference between the daily published commodity prices at two different points and subtracting to get the transportation rate between them . in this case the two points were the san juan basin and the socal needles delivery point .
the case was set for expedited hearing last summer by the commissioners acting on staff recommendations .