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FERC OK's Rate Hike, Placing Part of AIM Project Into Service

In separate orders, FERC has given Algonquin Gas Transmission LLC permission to enter part of its Algonquin Incremental Market (AIM) Project into service, and for the company to increase some of its initial rates in order to recoup higher-than-expected construction costs.

Last Thursday, the Federal Energy Regulatory Commission said Algonquin could place into service the Southeast to MLV 19 take-up and relay for the project [CP14-96], an area that includes Putnam County, NY, and Fairfield County, CT.

"Based on our daily third party compliance monitor field inspections, rehabilitation and stabilization of the construction work areas for this facility are proceeding satisfactorily and in compliance with the terms of the order," wrote Rich McGuire, FERC's director of the Division of Gas-Environment and Engineering.

Also last Thursday, FERC approved a proposal by Algonquin to amend its certified initial reservation charges due to increased construction costs for the 37.4 miles of pipeline and related facilities that comprise the AIM Project, including the 4.1-mile West Roxbury Lateral.

Specifically, Algonquin will increase its initial reservation charge for the AIM Project from an estimated $42.5748/Dth to $48.507/Dth for Rate Schedule AFT-1 service. Algonquin will also raise the initial reservation charge for the West Roxbury Lateral from an estimated $18.1976/Dth to $24.378/Dth for Rate Schedule AFT-CL service. The company will also levy a commodity charge of $0.0069/Dth for Rate Schedule AFT-1 to recover $603,667 in variable costs.

According to FERC, the proposed initial rates reflect a first-year cost of service of about $199 million for the AIM Project, and $29.3 million for the West Roxbury Lateral.

Last month, Algonquin apologized to FERC for attempting to extract a broken drill stem from under the Hudson River in August during work on the AIM Project (see Daily GPISept. 21).

FERC gave authorization for Algonquin to begin construction of the 342,000 Dth/d pipeline in March 2015 (see Daily GPI, March 4, 2015). The AIM Project will transport natural gas produced in the Marcellus and Utica shales from Ramapo, NY, to citygates in Connecticut, Rhode Island and Massachusetts.

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