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Laser Abandons Public Utility Plans; Peregrine, Pentex Move On

Laser Northeast Gathering Co. LLC is abandoning its efforts to have a proposed gathering system in northeast Pennsylvania classified as a public utility with the Pennsylvania Public Utility Commission (PUC).

Despite Laser's decision, two other companies seeking public utility status with the PUC for their projects -- Peregrine Keystone Gas Pipeline LLC and Pentex Pipeline Co. -- are moving forward with their plans.

"We are full speed ahead with our application," Peregrine Senior Vice President Loren Fuller told NGI's Shale Daily on Tuesday. Pamela Polacek, an attorney with the Harrisburg, PA, law firm McNees Wallace & Nurrick LLC, said her client Pentex "is continuing to move forward with their request before the commission."

According to documents filed Friday with the PUC, Houston-based Laser said it was "no longer willing to serve any and all potential customers; will use contracts to select and serve a defined and limited group of customers; and is no longer committed to expand its facilities to meet demand of the public as would a public utility."

Laser CEO Thomas Karam said the public utility application was submitted to the PUC before the company was acquired by Delphi Midstream Partners LLC in July 2010 (see Daily GPI, July 13, 2010). "While we agreed with the action taken at the time, our business model has now changed and is inconsistent with the criteria to be deemed a public utility," Karam said. "We've made the business decision to focus our business and growth to serve a limited number of customers."

Laser's 30-mile gathering system would traverse 21 miles of Susquehanna County, PA, and nine miles of Broome County, NY, where it would connect with the Millennium interstate pipeline.

Laser broke ground for its $50 million PA-NY Gathering Line Project in February, despite an administrative law judge's recommendation last December that the PUC deny the company's application on the grounds that the project wouldn't provide a public service (see Shale Daily, Feb. 3; Dec. 3, 2010). In May the PUC disagreed with the judge and voted to remand the case to her, asking her to clarify how the PUC should regulate Laser as a public utility (see Shale Daily, May 20).

The Laser case was being watched closely. Other pipeline companies were concerned that if Laser became a public utility, it could set a precedent that would someday move them under the dominion of the PUC (see Shale Daily, July 12).

Meanwhile, citizens groups fretted over pipeline companies using the powers of eminent domain. State Rep. Phyllis Mundy (D-Kingston) said in June she intended to introduce a bill that would prohibit gathering companies from obtaining public utility status (see Shale Daily, June 27).

Peregrine is seeking public utility status to build a $16.2 million gathering system through three counties in southwestern Pennsylvania, but in January the PUC put its request on hold until the Laser case was settled. Meanwhile, Pentex wants to expand its gathering system in southeastern Bradford County, PA (see Shale Daily, April 4).

Asked what would happen now that Laser has backed out, Polacek said, "I know certainly with [Pentex's] case we have a procedural schedule that's been set. If each of these cases moves forward and each of the utilities continue, eventually the commission will get these cases."

On Monday the PUC said it was canceling two public hearings scheduled for Wednesday to receive comments on the Pentex case, due to safety concerns following flooding throughout Pennsylvania. The commission said the hearings would be rescheduled in October.

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