FERC Awards $ 13 million to shipper in Interstate Pipeline Competition Decision

Gas Pipelines

Long a supporter of interstate gas pipeline competition, on May 30, the Federal Energy Regulatory Commission (FERC) ruled that Sunoco unduly preferred certain shippers by executing throughput and deficiency agreements (TDAs) on the existing capacity of the Marysville Pipeline. The Marysville Pipeline has the capacity to transport roughly 192,000 barrels per day (BPD) of light crude oil equivalent. Administrative Law Judge Patricia Hurt cited pipeline company’s common carrier obligations of the Interstate Commerce Act (ICA) which prohibit a pipeline from unduly preferring or prejudicing any one shipper or class of shippers. As a result of the decision, which is an initial ALJ decision subject to further review, Sunoco must pay BP damages exceeding $ 13 million and ALJ Hurt suggested that a 2010 proration policy be re-opened to address potential interstate competition discrimination.  Read a full copy of the decision.

Interstate competition in utility, pipeline, transportation, and related matters remains a priority of Federal regulators.  The Marysville decision stands for the proposition that FERC will review in some detail agreements and negotiations with current and existing pipeline shippers for evidence of interstate discrimination. The ICA and similar federal laws provide FERC and other federal agencies and commissions authority to review operations and agreements for discrimination.


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