FGT Loses Key Expansion Customers After Court Ruling
Florida Gas Transmission (FGT) has advised FERC that marketers
Enron North America Corp. and Dynegy Marketing and Trade have
dropped out of its Phase V expansion project in the wake of a
Florida Supreme Court decision in April that dealt a serious blow
to the development of merchant power in the state.
The withdrawals of Enron and Dynegy could force FGT to
significantly downsize its latest expansion plans, as the two
marketers combined represented nearly 100,000 MMBtu/d of contract
commitments. Enron had signed up for 50,479 MMBtu/d, while Dynegy
had entered into a precedent agreement for 41,204 MMBtu/d.
The proposed firm capacity that the marketers had signed up for
was tied to the construction of two new power plants --- Duke
Energy's New Smyrna Beach facility and the Palmetto Power plant.
But the Florida court threw merchant power construction in the
state a curve ball when it held that state regulators were
prohibited from authorizing the construction of new generation
facilities whose output was not fully committed to use by Florida
customers who purchase electrical power at retail rates.
Specifically, the court ruled the Florida Public Service
Commission exceeded its authority by approving the need for the 514
MW New Smyrna Beach facility when only 30 MW of the plant's output
would be dedicated to in-state use. The decision effectively blocks
construction of a string of about 25 merchant power facilities that
have been planned for the Florida market.
"Rehearing of this opinion has been sought; however, the matter
is not expected to be resolved within the Phase V expansion
schedule," FGT told FERC [CP00-40]. The proposed Phase V project,
which would add 231 miles of new pipe and 400 MMcf/d of capacity to
FGT's system, is targeted for completion by April 2002.
Although it had pulled out of the Phase V expansion, FGT said
Enron has informed it that it wants to participate in the
pipeline's next expansion, for which an open season is now being
held. The Phase V expansion capacity that Enron had initially
committed itself to the construction of the New Smyrna Beach
Dynegy notified FGT by letter that it was exercising its
termination rights for firm expansion capacity that was related to
the Palmetto Power plant. The Houston-based marketer said it
couldn't commit to the capacity "at this time," FGT said.
FGT noted it currently is negotiating with replacement shippers
for the capacity returned by Enron and Dynegy. It said it plans to
file an amendment to its Phase V expansion application at FERC on
or before Aug. 1.
FGT said it already has decided to exclude a number of
facilities from the Phase V expansion: 1) 29.8 miles of 16-inch
line located in Volusia Country, FL; 2) 6.8 miles of 16-inch
pipeline in Orange and Osceola Counties, FL; 3) 14.8 miles of
24-inch pipeline looping in Polk Country, FL; and 4) 8.2 miles of
24-inch pipeline looping in Hillsborough Country, FL.
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