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
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
"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."
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