8-KRegulation FDOther EventsExhibits & Filings

Energy Transfer LP 8-K Report, Regulation FD Disclosure (Jul 26, 2007)

Filed July 26, 2007For Securities:ETET-PI

Summary

Energy Transfer Partners, L.P. (ETP), a subsidiary of Energy Transfer Equity, L.P. (ET), disclosed on July 26, 2007, that it is facing significant legal challenges from both the Federal Energy Regulatory Commission (FERC) and the Commodity Futures Trading Commission (CFTC). The FERC has issued an Order to Show Cause and Notice of Proposed Penalties, alleging manipulative or improper trading activities in the Houston Ship Channel market around the time of Hurricanes Katrina and Rita in 2005, and also in earlier periods of 2004 and 2005. Specific allegations include benefiting financially from commodity derivative positions and index-priced physical gas purchases. Furthermore, the FERC's action extends to ETP's Oasis Pipeline, with claims of granting undue preference to an affiliate for pipeline capacity and charging rates exceeding lawful limits. The CFTC has filed a separate lawsuit alleging attempts to manipulate natural gas prices in the Houston Ship Channel market in late 2005 for financial gain from derivative positions. ETP denies these allegations, asserting that its activities were compliant with regulations, and intends to contest the matters vigorously. Settlement negotiations were unsuccessful, and regulatory bodies are seeking substantial financial penalties and disgorgement.

Key Highlights

  • 1ETP is facing allegations of manipulative trading activities in the Houston Ship Channel market from both the FERC and CFTC.
  • 2The FERC is seeking $70.1 million in disgorgement and $97.5 million in civil penalties.
  • 3The CFTC is seeking civil penalties of $130,000 per violation or three times the profit gained per violation.
  • 4Allegations also concern the Oasis Pipeline, including undue preference to an affiliate and charging excessive rates.
  • 5The issues primarily relate to trading and transportation activities in 2004 and 2005, particularly following Hurricanes Katrina and Rita.
  • 6ETP states it intends to contest these cases vigorously, as settlement negotiations were unsuccessful.
  • 7ETP maintains that its trading and transportation activities complied with applicable laws and regulations.

Frequently Asked Questions

The primary allegations from the FERC and CFTC involve manipulative or improper trading activities in the Houston Ship Channel market aimed at financial gain from derivative positions and index-priced gas purchases. Additionally, the FERC alleges that ETP's Oasis Pipeline gave undue preference to an affiliate for capacity and charged rates exceeding lawful limits.

The FERC is seeking $70.1 million in disgorgement of profits and $97.5 million in civil penalties. The CFTC is seeking civil penalties calculated as $130,000 per violation, or three times the profit gained from each violation.

Yes, ETP recently engaged in settlement negotiations with the agencies to resolve these matters. However, these negotiations were not successful.

ETP asserts that its trading and transportation activities during the periods in question fully complied with all applicable laws and regulations. The company intends to contest these cases vigorously.