UPDATE 2-U.S. FERC judge rules Seaway oil pipeline rates too high

Mon Sep 16, 2013 5:17pm EDT
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NEW YORK, Sept 16 (Reuters) - A U.S. Federal Energy Regulatory Commission (FERC) judge has ruled that rates on the Seaway pipeline were too high, landing an initial victory for crude oil shippers, although the line's operator said it would challenge the decision.

According to the FERC's ruling filed late Friday, Seaway had proposed tariffs of $3.82 per barrel for light crude and $4.32 for heavy crude, after reversing the line in 2012 to flow north-to south, allowing shippers to drain a glut of crude oil at the Cushing, Oklahoma storage hub.

The 400,000 barrel per day (bpd) pipeline, jointly owned by Enterprise Product Partners LP and Enbridge Inc , is one of the few major arteries carrying crude oil from Cushing -- delivery point of the U.S. crude oil futures contract -- to the U.S. Gulf Coast refining hub.

The FERC said "numerous" protests to the tariffs were filed by shippers and the regulator had suspended the rate in May 2012 to hear the arguments.

"It is the determination of the Presiding Judge that Seaway has failed to carry its burden to prove that its proposed committed and uncommitted shipper rates are just and reasonable," Presiding Administrative Judge Karen Johnson wrote in her initial 86-page decision.

"The Presiding Judge finds further that Seaway's proposed committed and uncommitted shipper rates should be modified," she wrote.

Enterprise, which operates the line under its agreement with Enbridge, said it would challenge the decision.

"The Seaway Crude Pipeline Company strongly disagrees with several findings made by the ALJ and will be submitting a brief to the FERC by Oct. 15, 2013 challenging the decision," Enterprise said in a statement.   Continued...