Subject to certain conditions and a pending a technicalconference, FERC has approved a plan (RP98-140-000) allowingTennessee Gas Pipeline to reserve unused pipeline capacity, sellingit under short-term contracts, up to one year if the capacity canbe used to support a proposed expansion project. The tariff changewas made effective by the Commission on March 25

FERC said it believes the proposal “enhances the efficientutilization of existing pipeline capacity, and accomplishes theCommission’s goal of encouraging properly-sized construction ofexpansion projects.” The proposal will “assist Tennessee to satisfynew demand while using existing capacity to the maximum extentpossible. Furthermore, any harm in accepting the proposal at thisjuncture appears to be minimal in that the proposal imposes only atemporary delay in the awarding of long-term contracts and allowsthe capacity to be awarded on short-term basis for the interimperiod,” FERC said

In a joint protest, however, a group of Tennessee shippers saidthe proposal would allow the pipeline to withhold long-termcapacity for an expansion that may never materialize only to ensurea pipeline affiliate or a favored shipper can sign up for thecapacity at a later date. Among other protests, the shippers saidthe proposal is “designed to create a false sense of constraint onTennessee’s system, and will encourage shippers to pay more fornon-reserved capacity or for the expansion capacity when it becomesavailable.

As a result, the Commission plans to convene a technicalconference to discuss its “concerns regarding the clarity of theproposal,” and the protests of shippers.

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