Corruption at FERC: Lawyer charges pipelines given freedom to profiteer

Thomson Reuters News & Insight columnist David Cay Johnston on Oct. 17 reported that a fourth of the nation’s oil pipelines last year earned excessive profits, at up to seven times the rates allowed by the Federal Energy Regulatory Commission (FERC).

The charge appears in an explosive analysis prepared by a former general counsel for FERC.

R. Gordon Gooch, the former counsel, alleges in his Oct. 3 study, that Sunoco’s Mid-Valley Pipeline, which carries crude oil from Texas to Michigan, earned a 55 percent return on assets. That is seven times its authorized profit margin, based on a calculation derived from an accounting report the company filed with FERC.

Three other regulated monopoly pipelines earned more than 40 percent on their assets, while another three earned more than 30 percent, an examination of their FERC filings by the Reuters news agency shows.

To put that level of profitability into context, overall nonfinancial businesses earned a 6.7 percent after-tax profit on their assets last year, the latest Bureau of Economic Affairs report shows.

Washington Gas said to intimidate employees who grade leaks

WASHINGTON, D.C. - On the night of Dec. 19, 2010, a home exploded in Chantilly, Va. Firefighters had received a call for a gas leak, but by the time they arrived the blast had brought the home to the ground. According to eyewitnesses, the front door landed across the street in a neighbor's yard.

The home belonged to the Nguyens, a family of four who thankfully, were out to dinner. First generation Americans, they say it represented their American dream. "Everything we built up for my whole life and it's gone," says Thuan Nguyen. "It's really tough to look at."

According to the fire marshal's report, the explosion "was most likely due to the ignition of natural gas…". A spokesman told ABC 7 News that gas leaking from a pipe in the street had migrated into the home.

Washington Gas refuses to release the results of its investigation of the accident. Larry Leeds, president of the Brookfield Civic Association, has advocated for the family and the neighborhood. "I think Washington gas is screwing around," he says, "because they don't want to pay any money. I understand that. This is all about the money."

ABC 7 News has obtained a surprising internal memo, sent during deliberations over how to address a spike of leaks in Prince George's County. It reads, "We are NOT planning on an overall leak survey since that could result in finding new leaks."

Former employees of Washington Gas have come forward to share their own recollections. "I'm concerned about the customers and general safety of the public. And I think it's been jeopardized," says William Gibson, a retired 34-year Washington Gas employee. "And I think it's all been due to, again, a lot of profiteering on behalf of the gas company."

Three former employees describe leak evaluations as loose. They say while working for the company, they found a number of so-called grade ones - the most dangerous kind. But instead of immediately fixing them, Washington Gas argued over the grade, and replaced them with someone who would lower the grade.

"(There were times) I strongly felt from all my years of experience that it's a grade one leak," says Warren Davis, a retired 36-year employee. "And I turned it in as a grade one, only to find out the next day that someone went out behind me, and ... they may say, 'well this is actually a Two.'"

If Washington Gas finds a grade one leak, the company must fix it immediately. But by grading it a two, the company may have 15 months to fix it. And documents from the Virginia State Corporation Commission show just how pervasive this practice may be.

Amerigas buying Energy Transfer's propane operations

Energy Transfer Partners LP (NYSE: ETP) has agreed to sell its propane operations for $2.8 billion to AmeriGas Partners LP (NYSE: APU), a deal that would free Energy Transfer to focus on its natural gas pipeline business.

Unit holders of Energy Transfer, which had been one of the largest propane marketers in the U.S., will receive about $1.5 billion in cash and about $1.3 billion in AmeriGas common units.

The deal, expected to close late this year or early next year, also includes the assumption of $71 million in debt.

Illinois county sues Enbridge, contractor for bridge collapse

SYCAMORE, Ill. – After 10 months of trying to reach a settlement with the companies accused of causing the collapse of Keslinger Bridge, DeKalb County State's Attorney Clay Campbell filed a lawsuit seeking compensation.

Campbell and Afton Township officials named Enbridge Energy and Welded Construction in a lawsuit seeking an excess of $150,000 for damage they claim happened to Keslinger Bridge during work on an oil pipeline in 2008.

A final push was made in negotiations, but Campbell said the two sides could not come to an agreement. The 10-month negotiation was the second round of talks among the parties. Former DeKalb County State’s Attorney John Farrell also tried negotiating a resolution.

Campbell said he did everything he could to avoid litigation because of the cost, but he said the county had to pursue compensation. To minimize costs, Campbell said Farrell - now chief of the civil bureau - will handle the case.

"The company that destroyed this bridge is refusing to take responsibility," Campbell said. "The citizens of DeKalb County should look forward to having their day in court because they are entitled to it."

The lawsuit, which was filed Oct. 7, seeks damages for the repair of the bridge in excess of $150,000, in an amount to be determined at trial. DeKalb County Engineer Nathan Schwartz previously has estimated the repairs could cost about $1 million.

"I feel very confident because we have a strong case in our support," Schwartz said.

Lorraine Little, spokeswoman for Enbridge Energy, said the company has not had a chance to review the lawsuit and declined comment.

The Keslinger Road bridge collapsed Aug. 19, 2008, when its eight timber piles buckled, splitting the concrete deck in two and plunging it into the Kishwaukee River.

Investigations by the Illinois Center for Transportation and the DeKalb County Sheriff's Office showed the bridge likely collapsed because of trucks that weighed more than the legal limit crossing the structure.

Representatives from Welded Construction - which was contracted by Enbridge Energy to expand an oil pipeline in the area - admitted it had trucks weighing between 150,000-155,000 pounds crossing the bridge without proper permits.