FERC Rejects Columbia's Negotiated Terms
FERC last week rejected a proposed service agreement in which
Columbia Gulf Transmission tried to push the envelope too far by
negotiating terms and conditions of service with one of its
customers, Entergy Louisiana Inc. (ELI)
"While the Commission is cognizant that it is currently
evaluating the possibility of implementing policies that allow
negotiated terms and conditions of service" in the mega-notice of
proposed rulemaking, it reaffirmed that its current policy still
prohibits customization of service [RP96-369-003].
The proposed service agreement, which was filed at FERC in
November, called for ELI to pay a rate in excess of Columbia Gulf's
current maximum tariff rate for up to 100,000 Dth/d of
interruptible transportation service, while at the same time
agreeing to waive its right to designate additional secondary
receipt or delivery points. The negotiated rate was $0.0550/Dth,
with an annual charge adjustment of $0.0022/Dth.
The proposed negotiated deal raised a red flag with the Process
Gas Consumers Group, which questioned what benefit ELI would
receive from the pipeline in return for paying an above-maximum
rate. The Commission agreed that the question was a "legitimate"
one, particularly since ELI appeared to be agreeing to reduced
flexibility of service in exchange for the higher rate.
"The Commission's concern is that there be full disclosure [by
pipelines] of the essential conditions involved in negotiated-rate
transactions, including a specification of all consideration
connected with the transaction..." This includes filing at FERC
"any other agreement, understanding, negotiation or consideration
linked to the agreement," it said.
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