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FERC Okays Third Party Capacity for Northern Natural

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.

Susan Parker

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