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KN's Horizon Shines in Illinois, Wisconsin

KN's Horizon Shines in Illinois, Wisconsin

KN Energy has discovered there is more than just cheddar cheese production going on in Wisconsin these days. Potential customers from "all segments of the industry" showed interest in its proposed Horizon Pipeline project and have signed preliminary agreements for 800 MMcf/d of firm capacity, the company said yesterday.

The new pipeline would extend 129 miles from the Chicago Hub in northern Illinois to Hales Corners, WI, at a connection with Wisconsin Electric's system in the southern part of the state. "Our project serves more than just Wisconsin," said KN's Scott Parker, director of Midwest business development. "We're also serving northern Illinois.and that is an area of high-growth just like Wisconsin. Nicor Gas already has signed an agreement for 300 MMcf/d.

"The standard [markets] are the LDCs in those areas, but also now the major emphasis we see in this market is gas-fired power development... ComEd has gone to the marketplace and said they would like more power development in Illinois and southern Wisconsin is very similar. There's a substantial number of [new power projects] out there."

Parker said all of the contracts signed by shippers so far are preliminary and contain "outs." There will be further negotiations to make them binding commitments.

The line is expected to be sized between 530 Mcf/d and 1.2 Bcf/d. It slated to be in service in fall 2001. The project would have two rate zones: an Illinois and a Wisconsin zone. "We're offering 10-year term negotiated rates of 9.47 cents in Illinois and 12.2 cents in Wisconsin. There will be recourse rates for the project too, but all we can do is estimate those right now. Our 10-year rates are fixed. We've basically guaranteed those rates."

The Horizon project is nearly identical to another proposed pipeline, Guardian, which is being sponsored by Wisconsin LDC Wisconsin Gas and its parent company Wicor, CMS Energy and Viking Gas Transmission. Guardian is being designed with a firm capacity between 650 MMcf/d and 1.1 Bcf/d, and Wisconsin Gas already has committed to 650 MMcf/d. A Wisconsin Gas spokesman said yesterday the Wisconsin Public Service Commission has approved Wisconsin Gas' transportation agreement with Guardian. The project, which would go into service a year later than Horizon, also just completed an open season, and an additional three customers have signed binding precedent agreements for 53 MMcf/d, said spokesman David Fantle.

KN's Parker indicated that he thinks there's enough market growth to support both Horizon and Guardian. "As we look at the markets we're serving with our project, we're really serving different markets than Guardian," he said. "We're well east of what we know about their project. We don't connect to Wisconsin Gas' gates like they do. They don't connect to the gates that we do on Nicor, Natural and others." Horizon plans to file an application for the project with FERC later this year.

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