February 2, 2018 / 11:17 PM / 9 months ago

BP, Trafigura join shippers complaining to U.S. regulator about Colonial rates

NEW YORK, Feb 2 (Reuters) - Units of BP PLC and Trafigura AG on Friday became the latest companies to file a complaint with a U.S. regulator over shipping rates charged by Colonial Pipeline Co, which operates the biggest fuel pipeline system in the United States.

The complaint follows an identical one from oil major Chevron Corp leading refiner Valero Energy Corp and Delta Air Lines Inc filed in November over the fees charged by Colonial to ship fuel, including gasoline, diesel and jet fuel.

BP Products North America Inc, Trafigura Trading LLC and TCPU Inc urged FERC to set the matter for hearing and sought to consolidate their complaint with the November one.

"Good cause exists to believe that Colonial's existing rates... are unjust and unreasonable," the companies said in a 917-page complaint filed with the U.S. Federal Energy Regulatory Commission (FERC).

The complaints could lead to the first regulatory examination of Colonial Pipeline's rates in nearly two decades. The pipeline hauls more than 3 million barrels of fuel from the refinery hub on the U.S. Gulf Coast to northeast distribution centers every day.

Chevron, Valero and Delta complained to FERC that Colonial overcharged the companies by more than $60 million combined, and is potentially monopolizing fuel delivery into the New York region.

BP and Trafigura joined the companies in alleging that Colonial's opaque fee structure pushed its 2016 interstate revenue to exceed its costs by $339.3 million, earning it about a 29 percent realized return on equity.

"Excess earnings of this magnitude are far above the levels that the Commission has found to be sufficient to justify holding hearings in recent rate investigations of other pipelines," BP and Trafigura said.

Overall, BP Products' total estimated overpayment to Colonial for shipping fuel between January 2016 through December 2017, including so-called contentious "product loss allocation fees," was $55.5 million, according to the complaint. Trafigura's total estimated overpayment to Colonial during the same period was $27.2 million, the complaint said.

The companies seek reparations of those amounts and asked FERC to investigate whether Colonial should be allowed to charge market-based rates due to its monopoly in some markets.

Colonial could not immediately be reached for comment but the company defended its fees in December saying the complaint from Chevron, Valero and Delta was based on "purposefully manipulated" financial data.

Others including refiner Phillips 66, Flint Hills Resources LP and Castleton Commodities have filed to intervene in the proceeding. (Reporting by Devika Krishna Kumar in New York; Editing by Tom Brown)

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