AGL to pay $5M fine for violating gas pipeline policy

A unit of Atlanta Gas Light parent AGL Resources has agreed to pay a $5 million penalty levied by the federal government for violating natural gas pipeline regulatory policies.

Sequent Energy Management also must pay back $53,728.18 in “unjust profits” it received as a result of its actions.

The U.S. Federal Energy Regulatory Commission charged Sequent with “flipping.” In a consent agreement, the government agency described how Sequent bought excess pipeline capacity that had not been made available to all potential buyers.

That practice can lead to the pipeline capacity being sold at a lower-than-market rate.

AGL said the settlement would have no negative effect on its customers.

The $5 million penalty will be paid to the U.S. Treasury. The repaid profits will go to government energy assistance programs.

Sequent engaged in flipping over a 28-month period between August 2005 and November 2007, the government said.

Companies purchase pipeline capacity rights mainly for use in the winter months when the demand for natural gas for heating is great. Some of that capacity is not needed in warmer weather months when the demand for natural gas is down, so owners of that excess capacity try to sell it to industrial customers, utilities and others who may need it.

Making that capacity available to the largest number of potential bidders can generate the highest return for a seller. Not doing so can lead to a below-market rate for the buyer.