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Secret tape recordings may affect a $970 million merger by Dominion Hope with Equitable Resources Incorporated of Pittsburgh.
The secretly-taped conversations of a disgruntled former executive have added a new twist to the plan to merge two of the state's biggest natural gas utilities.
At least 100 pages of phone transcripts were part of a filing by the Public Service Commission's consumer advocate office, which has suggested that Dominion Hope manipulated regulators in order to inflate profits.
The transcripts of phone conversations were taped by a former Dominion official who says he quit after complaining of gas-price manipulations.
The PSC must approve the merger.
In documents obtained by The Charleston Gazette, Dominion officials appear to talk about schemes to buy gas from Dominion drilling affiliates at unnecessarily high prices so the affiliates and Dominion could benefit at ratepayers' expense, in violation of public utility regulations.
Another ploy, according to the documents, suggests officials discussed the shifting of assets from operations in West Virginia to Ohio in order to throw regulators off the trail.
Dominion Hope spokesperson Dan Donovan says the phone conversations have been taken out of context, and would absolve them of any wrongdoing when heard in full.
The purchase of Dominion Hope would make Equitable the state's second-biggest gas provider, behind Mountaineer Gas.
Joe Morris, a staff writer for the Gazette, published information from the tapes:
"We had that meeting in December where they wanted to move some money back to East Ohio or something," says Paul Kroll, Dominion Hope's former manager for pricing and regulatory affairs, in one of the conversations. "I said, 'Bill, that's illegal. You are just going to get yourself in jail. You can't do that.'"
On the other end of the line, P. Craig Nicholes, a buyer for Dominion Hope, responds: "All he has got to do is find it," referring apparently to a consumer advocate office lawyer.
In another exchange, the head of the Dominion Field Services affiliate, Charles Roberts, complains to Kroll, who was secretly taping the conversations, about Dominion Hope's negotiations to buy gas from Field Services.
"I'm supposed to be looking out for Hope," Roberts says. "But there's got to be some skin in it for me, and that's what I was trying to do. [Inaudible] We can find you direct feed supply. Save you and the ratepayer, and I like to do that, but there has to be some skin in it for us. And now, yeah, there is not much money and you're taking away our existing margins and just to pass it on to the ratepayers. Tell me what I'm missing."
"These were all self-edited by Paul Kroll in order to put people in a certain light," said Dominion Hope spokesman Dan Donovan. "The whole tape is not there, and the other person doesn't know they're being recorded."
Kroll quit in 2005, alleging "serious and intolerable adverse and hostile working conditions" following his complaints about price manipulation. His lawsuit against Dominion Hope in Harrison Circuit Court will be heard this summer. Kroll did not return a call for comment.
"When the West Virginia allegations are fully examined, we believe they will be found to be without merit," Donovan said.
The transaction Roberts was discussing on the tapes ultimately benefited ratepayers, he said. "We can't do it now, but at the proper time we'll show the transaction benefited West Virginia ratepayers," Donovan said.
If the PSC determines that Dominion Hope was cheating ratepayers, it could impose regulatory orders for the utility to repay ratepayers, the consumer advocate filing says, and those repayments could be big enough to affect Equitable's purchase price of Dominion Hope.
"Certain suspect practices may have been engaged in by Dominion Hope and its affiliates to the detriment of the West Virginia ratepayer," the filing states. "The implications of the information is so far-reaching that it may even potentially impact the appropriate purchase price for Dominion Hope."
Read the entire story www.wvgazette.com
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