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Transco's SouthCoast Project Comes Under Fire

Transco's SouthCoast Project Comes Under Fire

Existing shippers on Transcontinental Gas Pipeline have expressed widespread opposition to the pipeline's request to roll in the costs associated with its SouthCoast expansion project in Georgia and Alabama.

They contend the SouthCoast expansion is Transco's latest effort to try to segment its projects in order to circumvent the 5% threshold test for rolled-in rate treatment. When viewed by itself, they concede the rate impact of the SouthCoast project on existing shippers is below the threshold. But when considered in the context of other recent Transco expansions - SunBelt, Mobile Bay and Cherokee, to name a few - the shippers argue the rate impact on the existing system is consideraly greater than the required 5%.

Consolidated Edison of New York called on the Commission to view all four of the expansion projects as a single project to determine whether Transco has met the 5% test. "To view the SouthCoast project in isolation from SunBelt, Mobile Bay and Cherokee is to ignore the reality that Transco is engaged in a major expansion of its system over a relatively short period of time," ConEd told FERC [CP99-392].

Washington Gas Light estimated the rate impact of the Sunbelt, Cherokee and SouthCoast projects would total more than $260 million, and would exceed the 5% threshold. It further argued that the system benefits cited by Transco for rolling in the SouthCoast expansion didn't justify the higher costs.

Some existing Transco customers, especially those on the Sunbelt expansion, insist that rolled-in rates would give SouthCoast shippers a competitive advantage over SunBelt shippers, who still pay incremental rates. To even the score, South Carolina Pipeline Corp. asked FERC to condition Transco's request for rolled-in treatment for SouthCoast on the pipeline rolling in the costs of its SunBelt expansion.

SCANA Energy Marketing opposed Atlanta Gas Light's (AGL) subscription to SouthCoast capacity, and urged the Commission not to ratify the agreement - at least until a reverse auction is conducted that would allow existing Transco shippers to turn back unused capacity, thus enabling the pipeline to better size its proposed expansion.

"...AGL does not need the SouthCoast capacity," said SCANA Energy, the largest non-affiliated marketer on AGL's system. In light of the rapid pace of retail restructuring in Georgia, "AGL is already foisting its upstream capacity on retail marketers in excess of their reasonable present needs. Moreover, AGL will be leaving the business of holding upstream interstate capacity very soon and certainly is not in a position to commit to use this capacity for any long term."

AGL has entered into a precedent agreement with Transco for 61,160 Dth/d of the 204,099 Dth/d SouthCoast expansion capacity, which would make it the second largest capacity-holder. The largest shipper, Santee Cooper, has signed up for 80,000 Dth/d. Transco says shippers have executed agreements for the entire capacity of the proposed project, which is expected to give shippers greater access to Mobile Bay gas production.

Susan Parker

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