FERC on Thursday ordered a hearing before an administrative law judge on allegations that Total Gas & Power North America (NYSE:TTE) manipulated the price of natural gas at several locations in the Southwestern U.S. between June 2009 and June 2012 (IN12-17).
The commission announced its investigation into the allegations in April 2016, when it issued a show-cause order that sought $213.6 million in civil penalties and disgorgement of $9.2 million in unjust profits, plus interest. It also sought civil penalties of $1 million from trader Aaron Hall and $2 million from trader Therese Tran.
The Office of Enforcement alleged that Hall and Tran made uneconomic trades of monthly physical fixed-price natural gas during bidweek at the regional trading hubs of Southern California Gas, El Paso Natural Gas, Permian Basin, West Texas, Waha, El Paso and San Juan Basin.
FERC said Total then reported those trades to Natural Gas Intelligence and Platts’ Inside FERC Gas Market Report to skew their monthly indexes to benefit company positions tied to the indices. Two former Total traders, Matthew Wilson and Stephen Callender, described the alleged scheme to investigators after becoming aware of it.
Total and the traders filed a response in January 2017 contending the evidence contradicted Enforcement’s allegations and that FERC relied “heavily on two witnesses who show strong biases against [the] respondents and have significant personal motivations to twist and falsify their testimony.”
“Enforcement staff argues that Wilson and Callender are credible because they corroborated each other and ‘described the same general mechanics of the manipulative scheme.’ But this conclusion ignores significant discrepancies between their testimonies, including that Callender claims he spoke with Wilson during the investigation, but Wilson flatly denies it,” Total said.
The company said Wilson did not allege manipulation until he knew that he was about to be fired and that Callender made his allegations nearly seven months after he was terminated.
Commissioner Neil Chatterjee said he supported the commission’s decision “to set the disputed factual issues for hearing before acting on the matter. However, I emphasize that this hearing is an impartial venue to consider the credibility of the evidence and the validity of the claims, not a freight train to prove the case against [the] respondents.”
A prehearing conference will be held within 45 days.
