An effort to recover a purported $373 million "windfall" from Texaco Inc. for consumers of national gas will be announced today by Sen. Howard M. Metzenbaum (D-Ohio) and a coalition of unions and consumer and energy organizations.
They will ask the Federal Energy Regulatory Commission to modify a settlement that has let the oil company retain the windfall, which resulted from Texaco's knowing unlawful diversion of 208 billion cubic feet of gas from public lands to its own use.
The diversion, a violation of the Natural Gas Act, occured over an 11-year period and deprived interstate customers of the equivalent of a year's supply of gas for 1.7 million homes.
"Wrongdoers should not be allowed to profit from their own wrongdoing," Metzenbaum said. "But that is exactly what happened" under the settlement which was initially approved in 1977 by the Federal Power Commission and made final in 1978 by FERC, its successor.
While Texaco was taking the gas from leased federal lands in offshore Louisiana for its refinery in Port Arthur, Tex., some comsumers in many areas of the nation "were literally freezing because this gas was unavailable in the interstate market," Metzenbaum said.
The agencies ordered Texaco to "pay back" the diverted gas with replacement fuel from nonfederal lands, charging the affected interstate pipelines the going national rates.
The settlement became effective after Congress enacted a 1978 law sharply raising gas prices. As a result, Texaco could sell the "pay back" gas at prices several times higher than had prevailed in the diversion period.
This produced the so-called windfall, which has been put by experts consulted by The Washington Post at $373 million, but has been estimated by others at between $300 million and $400 million.
"FERC has not exhibited any inclination to do anything about it, so our only recourse is to petition to modify this settlement and seek some justice for comsumers who have had to foot this bill," Metzenbaum said.
Under the coalition proposal, FERC would modify the settlement to lower gas bills for millions of consumers by providing the replacement 208 billion cubic feet "at prices low enough to deprive Texaco of the profits resulting from its unlawful diversion. . . ."