FERC Approves TGP Settlement
FERC last week approved a contested settlement in which
Tennessee Gas Pipeline agreed to offer discounted transportation
rates to shippers using the Perryville, LA, hub. This action is
intended to further the development of Perryville as a market
The settlement was supported or not opposed by a majority of
Tennessee's customers involved in the proceedings. Only the KeySpan
Delivery Companies and the New York Public Service Commission
(NYPSC) objected to the deal.
While the two companies did not oppose the "primary practical
consequence" of the settlement --- the discounted transportation
rate on Tennessee at Perryville --- they seriously doubted it would
resolve what they saw as the greater problem: that Tennessee's rate
structure potentially inhibits the development of market centers.
In last Wednesday's order, the FERC found that KeySpan and the
NYPSC could not challenge the portion of the settlement that dealt
with the potential anticompetitive effects of Tennessee's rate
structure "because they were non-contesting parties to [a] 1996
settlement" between the pipeline and its customers. "KeySpan and
the NYPSC are, in essence, seeking to revoke their consent to the
1996 settlement after having received all of that settlement's
benefits," the order said. The latest settlement is a resolution of
the concerns raised by Reliant Energy Gas Transmission during the
negotiations of the 1996 settlement, which it contested. Reliant
argued that Tennessee's use of a system-wide cost of service
improperly included production-area costs in its market-area rates,
which it claimed curbed the development of market centers at
Tennessee interconnections with competing pipelines.
©Copyright 2001 Intelligence Press, Inc. All rights
reserved. The preceding news report may not be republished or
redistributed in whole or in part without prior written consent of
Intelligence Press, Inc.