FERC Okays Third Party Capacity for Northern Natural
FERC last week changed its tune and cleared the way for Northern
Natural Gas to acquire off-system, interruptible capacity from
third-party pipelines. On rehearing of a July order, the Commission
found that since Northern Natural sought the IT capacity to augment
its own operations, rather than for the purpose of re-marketing it,
its request did not raise the concerns cited in a 1997 Texas
Eastern Transmission case. There, FERC feared that third-party
purchases could lead to preferential treatment for purchasing
pipelines and could limit the capacity choices of other customers
on third-party systems.
But these issues were "inapplicable" in the Northern Natural
case, the FERC order said [RP98-341-001]. "The factor that
distinguishes Northern's proposal here from that in Texas Eastern
is that the off-system capacity to be obtained by Texas Eastern
could have been re-marketed to other shippers, while in Northern's
proposal says the off-system capacity will not be re-marketed and
is only for operational use."
The Commission's decision in Texas Eastern was remanded by the
D.C. Circuit Court of Appeals this year. The court said FERC had
not adequately explained why interstate pipelines had to seek
advance Commission approval to acquire off-system capacity while
other parties didn't.
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