Fuel shippers request FERC to expedite hearing on Colonial Pipeline rates

September 10, 2018

By Stephanie Kelly

NEW YORK (Reuters) – Chevron, Valero and Delta Air Lines urged U.S. regulators to expedite a hearing on the fee structure of the largest fuel pipeline in the United States that they allege is costing them millions of dollars.

Delays in a hearing on Colonial Pipeline’s rates by the U.S. Federal Energy Regulatory Commission (FERC) is costing, “at a minimum,” about $4.95 million per month, the companies said in filing late on Friday.

Chevron Products Co, Valero Marketing & Supply Co and Epsilon Trading LLC, the trading arm of Delta, filed a complaint with FERC in November that said Colonial’s fees “greatly exceed just and reasonable levels.”

The complaint, which has been pending with FERC for nine months, also alleged Colonial overcharged the companies by more than $60 million combined over a two-year period, and is potentially monopolizing fuel delivery into the New York region.

Colonial connects Gulf Coast refineries with markets across the southern and eastern United States through more than 5,500 miles of its pipeline system, delivering gasoline, diesel, jet fuel and other refined products.

In the new filing, the companies request that FERC set a hearing for the complaints against Colonial, saying that the delay by FERC is “abnormal,” while “prejudicing” the companies.

FERC spokeswoman Tamara Young-Allen declined to comment on the filing, saying it is policy not to comment on a pending Commission decision. Colonial did no immediately comment.

Colonial has previously said the complaint filed in November has no merit and that the shippers manipulated data “and made improper and highly unrealistic assumptions in an effort to strengthen their arguments.”

The U.S. Congress set Colonial’s rates in 1990s-era legislation. In 2001, FERC allowed Colonial to charge market-based rates from the Gulf Coast to the Philadelphia and New York areas, on the understanding that Colonial lacked monopoly power over those markets.

(Reporting by Stephanie Kelly; Editing by Andrea Ricci)

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September 10, 2018 at 10:28PM
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