Transco Admits MarketLink Contracts are 'Non-traditional'
Transcontinental Gas Pipe Line defended its 700 MMcf/d
MarketLink project against charges it is not supported by the
market because many of its contracts with shippers contain rights
to terminate under certain circumstances. Singling out the protests
and "motions to reject" of CNG Transmission and Consolidated
Edison, Transco reminded the Commission many of its agreements are
not unlike those filed to support other projects. A few contracts -
about 34% of its capacity - are, however, a little different than
what has arrived at the Commission in the past, the pipeline
With regard to the shipper's right to terminate if the
MarketLink Project or the upstream Independence Pipeline is not
available by date certain, Transco asserts that "this type of
provision is typical in precedent agreements and has been accepted
by the Commission. Moreover, contract law provides that a contract
is binding and not illusory if the power to terminate the agreement
is conditioned on events that are beyond the control of the
contracting party." Transco said numerous pipeline applications
have been filed with "board out" provisions, which allow the
shipper's board of directors to make final decisions on contracts.
Transco noted the Maritimes & Northeast project contained such a
provision, as did the Liberty Pipeline project. Iroquois Pipeline's
contracts contained "partnership outs."
The agreements that give shippers the right to terminate if
markets don't materialize to support their capacity subscription,
probably are something new to the Commission, Transco admitted
without providing a reason for the Commission to accept them as
"binding." However, the pipeline said it "suspects" similar
agreements were filed under confidential seal by its competitor,
Millennium Pipeline. "It would be discriminatory to treat
disparately the MarketLink and Millennium Projects, which are
competing for the same markets," Transco said.
Transco also explained that, contrary to several protests,
MarketLink, Independence and SupplyLink, are not interdependent and
should not be treated as a single pipeline. "The Independence and
MarketLink projects.satisfy different supply and market needs and
alternatives, and.would proceed without the other." Transco said
MarketLink, which would add 154 miles of pipeline looping and
62,400 hp of compression along Transco's Leidy line in Pennsylvania
and New York, would have adequate access to upstream supply even if
Independence did not make it through the regulatory process.
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