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El Paso's Confirmation Practices Violate GISB, FERC Says

El Paso's Confirmation Practices Violate GISB, FERC Says

FERC last week dealt another blow to El Paso Natural Gas, finding that the pipeline had violated the Gas Industry Standards Board's (GISB) standards pertaining to confirmation deadlines and confirmation quantities.

The Commission granted a complaint brought by Northwest Pipeline in which it accused El Paso of making adjustments to confirmed amounts scheduled to flow between the two systems "after" the confirmation deadline, creating scheduled quantity discrepancies for shippers on Northwest. Northwest argued El Paso's practice violated GISB standards that require connecting pipelines to make changes to confirmed volumes ( either due to capacity constraints, confirming party reductions and/or associated balancing cuts) "prior" to the confirmation deadline.

"....[T]o the extent El Paso makes further adjustments to confirmed volumes (even if characterized as "scheduling") based on capacity constraints on its system or changes in the volumes that will be accepted by its downstream connections, its practices do not conform to the GISB procedures," the FERC order said [RP00-168].

"El Paso's interpretation would have the effect of legitimizing variances between confirmed and scheduled volumes regardless of the cause, with the attendant risk of increased mismatches at the interconnections of the pipeline grid. The Commission, therefore, concludes that Northwest has no obligation to accept from El Paso the scheduling volumes that vary from the confirmed volumes," it noted.

Even though El Paso's scheduling procedures may be "particularly complex" and require "more frequent" adjustments to its nominating and scheduling process due to capacity constraints, the Commission said "such complexities are matters that El Paso must resolve within the confines of its own system, and the burden of those complexities should not be shifted to Northwest or to its shippers."

FERC also granted Northwest's request for relief. It had asked FERC to order El Paso to calculate the scheduled quantities between the two pipeline systems dating from June 1, 1999 to the present, based upon the confirmations El Paso sent to Northwest prior to the confirmation deadlines. This would resolve the imbalance situation facing Northwest shippers whose nominations were curtailed by El Paso, Northwest said.

Susan Parker

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