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ALJ Backs Transco's Refusal Of Interconnect to ANR

ALJ Backs Transco's Refusal Of Interconnect to ANR

A FERC administrative law judge (ALJ) has agreed Transcontinental Gas Pipe Line was well within its rights when it denied ANR Pipeline an additional interconnection to its mainline system in Louisiana, saying that Transco's action did not discriminate, violate antitrust principles or cause ANR to lose business.

In his initial decision, Presiding ALJ David I. Harfeld found that Transco had refused similar requests by other pipelines in the past based on a "pre-existing" policy, which barred construction for any party of a second interconnect on a Transco supply lateral that would feed the same pooling point as an existing interconnect. ANR is seeking an additional 300 MMcf/d interconnect at Evangeline Parish, LA, so that shippers can avoid Transco's IT feeder charge at its existing interconnect with Transco near Eunice, LA [CP98-74-001].

Harfeld's ruling was in contrast to the Commission's decision last July ordering Transco to build the interconnect for ANR. FERC later stayed the order and directed the ALJ to hold hearings on two specific issues in the case. Interestingly, the Commission didn't ask Harfeld to address whether ANR ought to be granted the interconnect, but the ALJ said he felt "behoove[d]" to do so anyway.

The case has captured the interest of some in the gas industry because it puts squarely before the Commission the issue of its interconnection policy under the Natural Gas Act (NGA), which requires pipelines to provide mandatory interconnects to LDCs only. The ANR-Transco case, some observers say, poses the question of whether the policy should be expanded.

"The reason why this one's particularly critical is because the whole issue of pipeline interconnects ultimately will determine how competitive this industry's going to get," commented a producer source. The issue of whether FERC has the authority to order interconnects for parties other than LDCs was not before Harfeld, but Transco has raised it on rehearing.

When the case comes up again, FERC may decide it has "no latitude" to make any changes to its interconnect policy under the NGA. "But if they decide to go the other way, it will be very interesting," the producer source said. It conceivably could set a precedent that would "stretch the boundaries" of the NGA.

Susan Parker

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