Williams Cos., the second-biggest U.S. owner of natural-gas pipelines, agreed to pay $20 million to settle charges that a pipeline unit violated federal law by giving preferential treatment to company traders.
The civil penalty against Williams' Transcontinental Gas Pipe Line Corp. is the largest in the history of the Federal Energy Regulatory Commission, the agency said Monday.
The commission is scheduled next week to release its findings on manipulation of energy markets in California and whether the state is eligible for refunds and new energy contracts because of improper trading practices.
In the Williams case, a commission inquiry found that Transcontinental gave marketing affiliate Williams Energy Trading & Marketing "preferential treatment" in shipping gas over its pipeline network from 1999 until this year. In addition to the penalty, Transco agreed to end its "firm sales merchant function," the regulator said.
The settlement will result in an $8-million charge to fourth-quarter 2002 profit from gas-pipeline operations, the company said. The charge, combined with previously recorded amounts, reflects the total financial effect of the settlement, it said.
"Wrapping up these issues continues to help us move beyond 2002, which was one of the toughest years in Williams' long history," Chief Executive Steve Malcolm said in a statement.