A small Massachusetts local distributor last week asked FERC towaive a Tennessee Gas Pipeline tariff restriction on capacityreleases that it claims could “frustrate” the drive towardscompetition in the state’s natural gas market.

In a complaint filed last Monday, Fitchburg Gas and ElectricLight argued it would be penalized by the pipeline —specifically, its daily withdrawal capability from storage could becut by more than half this winter — if it assigns firm upstreampipeline and/or storage capacity to competing marketers so they canserve former LDC sales customers as ordered by the MassachusettsDepartment of Telecommunications and Energy (DTE).

Fitchburg Gas of Fitchburg, MA, has asked the Commission to acton its complaint by Dec.1, the day the DTE has ordered mandatorycapacity assignment to begin in the state. Although the LDC was theonly complainant, it believes “it is likely that other shipperswill join.”

At the center of the dispute is Tennessee’s rate schedule forfirm storage services, which presents storage customers with aHobson’s Choice – either forfeit their rights to release capacityupstream of storage or become subject to so-called “Ratchet II”limitations on storage withdrawal during the winter months.Fitchburg said it asked Tennessee for a “limited waiver” of thetariff restriction against capacity releases so that it couldassign capacity to marketers, but it noted that the pipelinerefused.

Currently, Fitchburg is able to withdraw a maximum of 4,807 Dthfrom storage on Tennessee’s system daily. However, that numberwould be sliced to 47%, or to 2,278 Dth/d, during Dec.-Feb. onceFitchburg Gas begins assigning its capacity to third-partymarketers in compliance with the DTE directive, said David K.Foote, senior vice president with the LDC.

Fitchburg Gas contends the tariff restriction benefits one partyonly — Tennessee. “With the tariff restrictions in place,Tennessee will have the opportunity to remarket the excessdeliverability no longer available to the storage shipper forced toassign capacity by virtue of its state unbundling program.Alternatively, if the shipper elects the excess [storage]deliverability, Tennessee faces less competition in the secondarymarket because the shipper will not be able to release its Zone 0-4capacity,” it said.

In the event FERC rejects the waiver request, in effect allowingTennessee to cut the LDC’s storage withdrawal capability in half,Foote said Fitchburg Gas would be forced to buy higher priced gason the spot market to fill its firm transportation capacity (4,807Dth/d) between market-area storage and its citygate.

“Instead of being able to fill all that transport with gas thatwe have in storage, we would have to buy gas in the market area”during the winter heating season that would be “far moreexpensive,” he said. The LDC estimated it would face an increase ingas costs ranging from $27,300 to $158,730 on an annual basis.

The higher costs would apply to all shippers behind Fitchburg’scitygate — “whether they continue to purchase their gas fromFitchburg or switch to a marketer,” the distributor told FERC.

Susan Parker

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