Tennessee Districts Fighting Bypass
A battle is brewing in Tennessee to determine exactly what
constitutes "retail distribution." On one side is a nascent
pipeline company and Tennessee producer that wants to make direct
sales to industrial end-users. On the other is a group of about 19
utility districts seeking to defend what they view as their
state-granted turf. The Tennessee Regulatory Authority (TRA) is
expected to decide soon what retail distribution means.
"Our view is if it's being delivered for consumption then it's
retail. If it's being delivered for resale, then it's wholesale,"
said Chuck Welch, the attorney representing the Informal Coalition
of Gas Utility Districts.
The Tennessee Oil and Gas Association (TOGA), which represents
oil and gas producers in the state, has taken the side of Tengasco
Pipeline Corp. The company wants to bypass the utility districts
and transport gas directly to industrial customers in Claiborne,
Hancock and Hawkins counties, TN. Tengasco Pipeline is a wholly
owned subsidiary of Tengasco Inc. -- a gas and oil company with
E&P operations in Tennessee and Kansas. Tengasco Inc.'s
estimated Tennessee reserves represent what is believed to be the
largest newly found gas field in North America.
Tengasco, which is more than a year away from establishing an
interconnect with interstate East Tennessee Natural Gas, currently
must sell its Tennessee gas production instate. The company wants
to sell directly to industrial end-users, but Tennessee law is
unclear on whether such a direct sale would constitute retail
distribution, which by law is the province of only the utility
districts. The TRA granted approval in July for Tengasco to
transport gas directly to end-users, and the utility districts are
fighting the ruling.
"We can no longer allow unregulated utility districts to stand
on the necks of Tennessee producers," said TOGA Executive Director
Tennessee State Rep. Joe Armstrong (D-15th District), a member
of the Tengasco board of directors, said bills are being drafted to
define retail distribution. "[The utility districts are] saying
basically that if we're allowed to go directly to the end-user,
then we're going to cherry pick the customers. They don't want
competition, point blank. The gas market has changed, deregulation
has brought in competition. These small utilities are just trying
to hold on to the last bastion of monopoly."
Welch said his utility district clients recognize competition is
an inevitability, but they want the transition to a competitive
market to be fair.
Joe Fisher, Houston
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