Tennessee Tariff Will Block Unbundling in MA, LDC Says
A small Massachusetts local distributor last week asked FERC to
waive a Tennessee Gas Pipeline tariff restriction on capacity
releases that it claims could "frustrate" the drive towards
competition in the state's natural gas market.
In a complaint filed last Monday, Fitchburg Gas and Electric
Light argued it would be penalized by the pipeline ---
specifically, its daily withdrawal capability from storage could be
cut by more than half this winter --- if it assigns firm upstream
pipeline and/or storage capacity to competing marketers so they can
serve former LDC sales customers as ordered by the Massachusetts
Department of Telecommunications and Energy (DTE).
Fitchburg Gas of Fitchburg, MA, has asked the Commission to act
on its complaint by Dec.1, the day the DTE has ordered mandatory
capacity assignment to begin in the state. Although the LDC was the
only complainant, it believes "it is likely that other shippers
At the center of the dispute is Tennessee's rate schedule for
firm storage services, which presents storage customers with a
Hobson's Choice - either forfeit their rights to release capacity
upstream 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 the
tariff restriction against capacity releases so that it could
assign capacity to marketers, but it noted that the pipeline
Currently, Fitchburg is able to withdraw a maximum of 4,807 Dth
from storage on Tennessee's system daily. However, that number
would be sliced to 47%, or to 2,278 Dth/d, during Dec.-Feb. once
Fitchburg Gas begins assigning its capacity to third-party
marketers in compliance with the DTE directive, said David K.
Foote, senior vice president with the LDC.
Fitchburg Gas contends the tariff restriction benefits one party
only --- Tennessee. "With the tariff restrictions in place,
Tennessee will have the opportunity to remarket the excess
deliverability no longer available to the storage shipper forced to
assign capacity by virtue of its state unbundling program.
Alternatively, if the shipper elects the excess [storage]
deliverability, Tennessee faces less competition in the secondary
market because the shipper will not be able to release its Zone 0-4
capacity," it said.
In the event FERC rejects the waiver request, in effect allowing
Tennessee to cut the LDC's storage withdrawal capability in half,
Foote said Fitchburg Gas would be forced to buy higher priced gas
on the spot market to fill its firm transportation capacity (4,807
Dth/d) between market-area storage and its citygate.
"Instead of being able to fill all that transport with gas that
we have in storage, we would have to buy gas in the market area"
during the winter heating season that would be "far more
expensive," he said. The LDC estimated it would face an increase in
gas costs ranging from $27,300 to $158,730 on an annual basis.
The higher costs would apply to all shippers behind Fitchburg's
citygate --- "whether they continue to purchase their gas from
Fitchburg or switch to a marketer," the distributor told FERC.