Transcontinental Gas Pipe Line defended its 700 MMcf/dMarketLink project against charges it is not supported by themarket because many of its contracts with shippers contain rightsto terminate under certain circumstances. Singling out the protestsand “motions to reject” of CNG Transmission and ConsolidatedEdison, Transco reminded the Commission many of its agreements arenot unlike those filed to support other projects. A few contracts -about 34% of its capacity – are, however, a little different thanwhat has arrived at the Commission in the past, the pipelineacknowledged.

With regard to the shipper’s right to terminate if theMarketLink Project or the upstream Independence Pipeline is notavailable by date certain, Transco asserts that “this type ofprovision is typical in precedent agreements and has been acceptedby the Commission. Moreover, contract law provides that a contractis binding and not illusory if the power to terminate the agreementis conditioned on events that are beyond the control of thecontracting party.” Transco said numerous pipeline applicationshave been filed with “board out” provisions, which allow theshipper’s board of directors to make final decisions on contracts.Transco noted the Maritimes &amp Northeast project contained such aprovision, as did the Liberty Pipeline project. Iroquois Pipeline’scontracts contained “partnership outs.”

The agreements that give shippers the right to terminate ifmarkets don’t materialize to support their capacity subscription,probably are something new to the Commission, Transco admittedwithout providing a reason for the Commission to accept them as”binding.” However, the pipeline said it “suspects” similaragreements were filed under confidential seal by its competitor,Millennium Pipeline. “It would be discriminatory to treatdisparately the MarketLink and Millennium Projects, which arecompeting for the same markets,” Transco said.

Transco also explained that, contrary to several protests,MarketLink, Independence and SupplyLink, are not interdependent andshould not be treated as a single pipeline. “The Independence andMarketLink projects.satisfy different supply and market needs andalternatives, and.would proceed without the other.” Transco saidMarketLink, which would add 154 miles of pipeline looping and62,400 hp of compression along Transco’s Leidy line in Pennsylvaniaand New York, would have adequate access to upstream supply even ifIndependence did not make it through the regulatory process.

Rocco Canonica

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