HOUSTON, Aug. 14, 2002 — Apache Corp. on Wednesday accused Williams Cos. of attempting to subvert federal regulators’ remaining authority to protect consumers from monopoly pricing on Williams’ gas pipelines.
An administrative law judge for the Federal Energy Regulatory Commission (FERC) ruled in June that Williams subsidiaries Williams Gas Processing – Gulf Coast Company and Transcontinental Gas Pipe Line Corp. (Transco) acted in concert in offering gathering services and abused their monopoly market power to charge producers “not reasonable competitive market” rates. The judge found that Williams’ actions hampered effective regulation of interstate transportation of natural gas, Apache said.
Williams has filed suit to overturn the ruling in Federal Court, claiming FERC’s expedited hearing schedule prejudiced the case against Williams.
Apache, Shell Offshore Inc. and other affected producers shut in certain production from North Padre Island offshore Texas and filed a complaint with FERC after Williams transferred ownership of a monopoly gas gathering system from a regulated subsidiary (Transco) to an unregulated affiliate (Williams Gas Processing).
Williams then presented the producers with a contract containing a “non-negotiable” rate change that would have tripled the cost of transportation over the 3.8-mile pipeline, required a lifetime commitment of reserves to the gathering system, and prohibited the producers from ever appealing for regulatory relief, the complaint said.
“Williams set up a toll booth and presented us with what they said was a non-negotiable fee for transporting natural gas for the life of the reserves. They provided no additional services, jacking up the price only because they thought they could get away with it,” said Apache Chairman Raymond Plank.
Plank said Williams took advantage of captive producers by “spinning down” a natural gas gathering system from a regulated subsidiary to an unregulated affiliate and then tripling transportation fees. The pipeline is the only means of moving gas from the affected North Padre Island properties, offshore Texas, to the mainland.
Plank said exercise of monopoly power by Williams and similarly inclined unregulated carriers could artificially inflate the price of gas or curtail supplies as producers are forced to shut in production from the Gulf of Mexico, which provides approximately one quarter of the nation’s natural gas.
Plank said that citygate gas prices in New York peaked around $10 per thousand cubic feet at the end of July, “and nobody will know if pipeline capacity was being manipulated until months later. Congress should open gas and electricity markets to full public view in real time if abuses are to be prevented.”
Apache is a large gas and oil independent with operations in the United States, Canada, Egypt, Western Australia, Argentina, China and Poland. The company is a founding member of the Coalition for Energy Market Integrity and Transparency, a nonprofit organization of some 5,000 municipal and cooperative utilities, consumers, gas producers and service companies representing approximately 75 million Americans.
Source: Apache Corporation