Daily GPI / NGI All News Access

Although 'Disappointed,' TriState Sponsors Aren't Giving Up

Although 'Disappointed,' TriState Sponsors Aren't Giving Up

While FERC's decision last week to call a technical conference on TriState Pipeline "obviously was not advantageous for us," lead sponsor CMS Gas Transmission and Storage isn't ready "at this point" to throw in the towel on the project, a company spokesman said.

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

The Commission ordered the conference to address a jurisdictional dilemma posed by the TriState application. As part of the project, TriState sponsors - CMS Gas and Westcoast Energy - have proposed leasing 123 miles of a Hinshaw pipeline (saving $179 million in costs) from parent Consumers Energy, with the leased line being operated by Consumers and performing a "dual use" role as 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 subject to Natural Gas Act (NGA) jurisdiction. It put the project on hold and suggested that TriState consider other options: 1) Consumers could construct, own and operate its own FERC-regulated pipeline in Michigan and provide transportation service for TriState and others in that state; 2) Consumers could file to have its existing facilities declared a FERC-regulated pipeline; or 3) TriState could buy the required Consumers' facilities.

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

The aim of the conference is to explore "various options" - other than those already proposed by the Commission - to resolve the "jurisdictional and policy issues" raised by TriState's application. TriState contends that any one of FERC's recommendations would take so long to incorporate that it could threaten the competitive stance of its pipeline project.

But the Commission made clear last week that it wasn't making any promises. "While we are willing to consider possible options in addition to those we have suggested, parties should bear in mind that with minor exception the Commission has not approved dual jurisdictional 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 can do it," said Kelly Farr, a Consumers Energy spokesman. "We do want to go forward with this project. We think it's a good project because it optimizes existing facilities. We're hoping we can still get this matter amicably resolved."

©Copyright 1999 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus