While FERC’s decision last week to call a technical conferenceon TriState Pipeline “obviously was not advantageous for us,” leadsponsor CMS Gas Transmission and Storage isn’t ready “at thispoint” to throw in the towel on the project, a company spokesmansaid.

The July 16th order, which directed Commission staff to convenea conference in 30 days and then to report back to FERC 30 dayslater, would put off a final vote on TriState for at least twomonths, causing the project to lag even further behind competingVector Pipeline. Vector, which was awarded final FERC approval inMay, and TriState are in a fierce race to serve the burgeoningNortheast gas market via the Chicago-to-Dawn Hub route.

The Commission ordered the conference to address ajurisdictional dilemma posed by the TriState application. As partof the project, TriState sponsors – CMS Gas and Westcoast Energy -have proposed leasing 123 miles of a Hinshaw pipeline (saving $179million in costs) from parent Consumers Energy, with the leasedline being operated by Consumers and performing a “dual use” roleas both an interstate and intrastate transporter.

But FERC rejected the “dual use” strategy in a May 27th order,finding instead that the leased line as proposed would be subjectto Natural Gas Act (NGA) jurisdiction. It put the project on holdand suggested that TriState consider other options: 1) Consumerscould construct, own and operate its own FERC-regulated pipeline inMichigan and provide transportation service for TriState and othersin that state; 2) Consumers could file to have its existingfacilities declared a FERC-regulated pipeline; or 3) TriState couldbuy the required Consumers’ facilities.

In early June, TriState asked for expedited rehearing of thedecision so that it could remain in the race with Vector. But theCommission shot down any hope for a quick ruling last week when itdirected staff to hold the conference.

The aim of the conference is to explore “various options” -other than those already proposed by the Commission – to resolvethe “jurisdictional and policy issues” raised by TriState’sapplication. TriState contends that any one of FERC’srecommendations would take so long to incorporate that it couldthreaten the competitive stance of its pipeline project.

But the Commission made clear last week that it wasn’t makingany promises. “While we are willing to consider possible options inaddition to those we have suggested, parties should bear in mindthat with minor exception the Commission has not approved dualjurisdictional natural gas pipeline facilities,” the order said[CP99-61-001].

“We laid out an application that we thought was very clear.We’re hoping that someone can tell us what the fix is…so we cando it,” said Kelly Farr, a Consumers Energy spokesman. “We do wantto go forward with this project. We think it’s a good projectbecause it optimizes existing facilities. We’re hoping we can stillget this matter amicably resolved.”

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