A proposal by NiSource subsidiary Energy Interchange to provide hub and storage services in Louisiana and Mississippi has come under sharp attack from shippers on affiliate Columbia Gulf Transmission.

Specifically, the shippers are protesting a joint application that calls for the release of 750,000 Dth/d of firm backhaul capacity on a segment of the Columbia Gulf system between Isola, MS, and Rayne, LA, to Energy Interchange so it can offer what it calls “hub services” at market-based rates, including interruptible parking, interruptible lending service, interruptible wheeling service, interruptible short-term balancing services, interruptible trading services and hub title transfer service.

“There are some unique aspects to certain of these services on Columbia. For example, what Energy Interchange calls a wheeling service is really a transportation service along a 250-mile section of Columbia Gulf’s mainline system consisting of three parallel 30-inch [diameter] pipelines [Line 100, Line 200 and Line 300),” said Total Gas & Power North America Inc. in a protest filed at the Federal Energy Regulatory Commission [CP11-509, CP11-510].

In effect, “Energy Interchange would operate as a ‘pipe-within-a-pipe,’ using Columbia Gulf assets and Pine Prairie [Energy Center] services. The application does not explain why Columbia Gulf could not itself have offered these services, raising concerns that Energy Interchange was created primarily to justify the request for market-based rate authority, which would have been denied Columbia Gulf,” said Indicated Shippers, a group of producers and suppliers.

Energy Interchange has contracted for 1,000,000 Dth of working gas storage capacity and 33,333 Dth/d of storage injection and withdrawal rights at Pine Prairie, a high-deliverability salt dome facility in Evangeline Parish, LA.

The application “raises a significant issue regarding where the boundary lies between true ‘wheeling’ services that may be permitted at market-based rates and wheeling that involves transportation service that must be performed at cost-based rates. A pipeline should not be permitted to avoid becoming subject to cost-based rates simply by characterizing a service as ‘wheeling’ when in fact the wheeling involves the transportation of gas,” said Indicated Shipper members, including BP Energy Co., BP America Production, Chevron U.S.A. Inc., ExxonMobil Gas & Power Marketing Co., Interstate Gas Supply Inc. and Shell Energy North America (US) LP.

The proposed capacity release will involve more than 750,000 Dth/d, said EDF Trading North America LLC. “Based on the proposed lease, Energy Interchange could actually flow up to 2,250,000 Dth/d on the Columbia Gulf system: a) 750,000 Dth/d of forward haul from the Perryville area; b) 750,000 Dth/d of firm backhaul; and c) an additional segment of 750,000 Dth/d in the onshore zone…In essence, Energy Interchange can control the pipeline with its ability to undercut all other customers on price,” EDF Trading said.

It contends that the “proposed service for Energy Interchange would devalue all other shippers’ capacity because replacement shippers will not want to take a severely degraded service, which will also reduce or eliminate any incentive for existing customers to renew their mainline capacity.”

The lease gives Energy Interchange “preferential service on Columbia Gulf compared to other shippers,” EDF Trading said. Under the proposed agreement, Energy Interchange will pay a reservation rate of approximately $0.01/Dth daily for forward haul capacity, while other mainline shippers currently pay a daily reservation charge of $0.1806/Dth for fundamentally the same rights on the Columbia Gulf system, it said.

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