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FGT Expansion Project on Track With Tampa Electric Deal

FGT Expansion Project on Track With Tampa Electric Deal

Florida Gas Transmission (FGT) said last week it found a large new market for its Phase V expansion project. It signed a long-term contract to provide 180 MMcf/d of firm transportation capacity to Tampa Electric's repowered Bayside generating plant (1,475 MW) in Hillsborough County in southwestern Florida.

The repowering of Tampa Electric's Gannon Power Station from coal to gas is the centerpiece of the electric company's $1 billion environmental plan, which was announced earlier this year as part of a settlement agreement with the Environmental Protection Agency and the Department of Justice related to alleged Clean Air Act violations. The plant, to be renamed Bayside Power Station, will reduce sulfur dioxide and nitrogen oxide emissions while improving electric reliability in the state. The electric utility's largest coal-fired power plant, Big Ben Station (1,700 MW), also may undergo a gas conversion and repowering at a later date, a Tampa Electric spokeswoman said.

The pipeline transportation contract to serve the repowered Tampa Electric plant gains back some of the market FGT lost following a Florida Supreme court decision that wiped out near-term plans for numerous proposed merchant power plants in the state. Earlier this month FGT advised FERC that marketers Enron North America Corp. and Dynegy Marketing and Trade dropped out of its expansion in the wake of the court decision in April (see NGI, June 12).

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 is being sought.

The withdrawals of Enron and Dynegy were expected to force FGT to significantly downsize its 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 Phase V project was expected to cost $400 million and add 231 miles of new pipe and 400 MMcf/d of capacity to FGT's system by April 2002. But with this new agreement with Tampa Electric, the expansion will cost $440 million and add 428 MMcf/d of capacity to the system.

"FGT's proven track record and ability to deliver this additional natural gas to Tampa Electric by spring 2002 will help us meet the timetable for our natural gas repowering project," said John Ramil, president of Tampa Electric. "This is a very important part of our aggressive plan to serve our growing customer needs and improve the air quality in the Tampa Bay area."

A Tampa Electric spokeswoman said the utility chose FGT over two other proposed pipelines, Coastal's Gulfstream project and The Williams Companies' Buccaneer pipeline, for economic reasons. The two other pipelines are battling for a foothold in the Florida market. Both would cross the Gulf of Mexico from Mobile, AL, and make landfall near Tampa before crossing the Peninsula to markets on the East Coast. Although probably only one of two will end up being built, they are neck and neck in their regulatory race. Both received preliminary approvals on non-environmental grounds from FERC last month (see NGI, May 1).

Meanwhile, incumbent FGT continues to mop up the Florida market ahead of the newcomers. It plans to file an amended application with FERC for the Phase V project on Aug. 1. The company recently started construction on its Phase IV expansion project, which includes a new pipeline to Fort Myers from Tampa (see NGI, May 29). The $268 million Phase IV project, initiating in Hillsboro and Lee Counties, FL, will provide 197 MMcf/d of incremental firm transportation service on an annual basis and will extend FGT's 4,700-mile existing transmission system by 139 miles. Designed to serve primarily Florida Power's repowered Fort Myers power plant, the Phase IV project will make gas service available in southwestern Florida for the first time. It has an expected in-service date of May 2001.

Rocco Canonica

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