KN Energy has discovered there is more than just cheddar cheeseproduction going on in Wisconsin these days. Potential customersfrom “all segments of the industry” showed interest in its proposedHorizon Pipeline project and have signed preliminary agreements for800 MMcf/d of firm capacity, the company said yesterday.

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

“The standard [markets] are the LDCs in those areas, but alsonow the major emphasis we see in this market is gas-fired powerdevelopment… ComEd has gone to the marketplace and said theywould like more power development in Illinois and southernWisconsin is very similar. There’s a substantial number of [newpower projects] out there.”

Parker said all of the contracts signed by shippers so far arepreliminary and contain “outs.” There will be further negotiationsto make them binding commitments.

The line is expected to be sized between 530 Mcf/d and 1.2Bcf/d. It slated to be in service in fall 2001. The project wouldhave two rate zones: an Illinois and a Wisconsin zone. “We’reoffering 10-year term negotiated rates of 9.47 cents in Illinoisand 12.2 cents in Wisconsin. There will be recourse rates for theproject too, but all we can do is estimate those right now. Our10-year rates are fixed. We’ve basically guaranteed those rates.”

The Horizon project is nearly identical to another proposedpipeline, Guardian, which is being sponsored by Wisconsin LDCWisconsin Gas and its parent company Wicor, CMS Energy and VikingGas Transmission. Guardian is being designed with a firm capacitybetween 650 MMcf/d and 1.1 Bcf/d, and Wisconsin Gas already hascommitted to 650 MMcf/d. A Wisconsin Gas spokesman said yesterdaythe Wisconsin Public Service Commission has approved Wisconsin Gas’transportation agreement with Guardian. The project, which would gointo service a year later than Horizon, also just completed an openseason, and an additional three customers have signed bindingprecedent agreements for 53 MMcf/d, said spokesman David Fantle.

KN’s Parker indicated that he thinks there’s enough marketgrowth to support both Horizon and Guardian. “As we look at themarkets we’re serving with our project, we’re really servingdifferent markets than Guardian,” he said. “We’re well east of whatwe 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 onNicor, Natural and others.” Horizon plans to file an applicationfor the project with FERC later this year.

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