FERC Denies Calpine Collateral Complaint; Sonat Due $31 Million

Oil Daily, The, June, 2003 by Christian Schmollinger

WASHINGTON -- Federal regulators on Wednesday denied a complaint from natural gas shipper Calpine on the question of how much collateral a shipper should post to a pipeline, a ruling that has strong implications on pipeline creditworthiness issues.

The Federal Energy Regulatory Commission (FERC) decided that Calpine should be held liable for a $31 million collateral payment to Southern Natural Gas pipeline (Sonat), overruling Calpine's claim that the payment was unreasonable. Sonat's creditworthiness rules state that a non-creditworthy shipper is required to put up collateral equal to 30 months of demand charges.

FERC found that compared to the risk that a non-creditworthy shipper poses to a pipeline, the collateral agreement is not unreasonable. The...