While FERC’s recent decision to call a technical conference onTriState Pipeline “obviously was not advantageous for us,” leadsponsor CMS Gas Transmission and Storage isn’t ready “at thispoint” to throw in the towel on the project, a company spokesmansaid.

The July 16th order, which directed Commission staff to convenea conference in 30 days and then to report back to FERC withinanother 30 days, would put off a preliminary decision on thenon-environmental aspects of TriState for at least two months,causing the project to lag even further behind competing VectorPipeline. Vector, which was awarded final FERC approval in May, andTriState are in a fierce race to serve the burgeoning Northeast gasmarket via the Chicago-to-Dawn Hub route.

The Commission ordered the conference to address ajurisdictional dilemma posed by the TriState application. As partof the project, TriState sponsors – CMS Gas and Westcoast Energy -have proposed leasing 123 miles of Hinshaw pipeline facilities(saving $179 million in costs) from CMS parent Consumers Energy,with the leased line being operated by Consumers and performing a”dual use” role as both an interstate and intrastate transporter.

But FERC rejected the “dual use” strategy in a May 27th order,finding instead that the leased line as proposed would be subjectto Natural Gas Act (NGA) jurisdiction. It put the project on holdand suggested that TriState consider other options: 1) Consumerscould construct, own and operate its own FERC-regulated pipeline inMichigan and provide transportation service for TriState and othersin that state; 2) Consumers could file to have its existingfacilities declared a FERC-regulated pipeline; or 3) TriState couldbuy the required Consumers’ facilities.

In early June, TriState asked for expedited rehearing of thedecision so that it could remain in the race with Vector. But theCommission shot down any hope for a quick ruling when it directedstaff to hold the conference.

The aim of the conference is to explore “various options” -other than those already proposed by the Commission – to resolvethe “jurisdictional and policy issues” raised by TriState’sapplication. TriState contends that any one of FERC’srecommendations would take so long to incorporate that it couldthreaten the competitive stance of its pipeline project.

But the Commission made clear that it wasn’t making any promisesto TriState’s sponsors. “Parties should bear in mind that withminor exception the Commission has not approved dual jurisdictionalnatural gas pipeline facilities.” [CP99-61-001]

Meanwhile, Vector is pulling far ahead of both TriState andpotential competitor Independence Pipeline, which also is in limboat FERC. Vector currently is acquiring rights-of-way, and expectsto begin some construction around December-January, said JuriOtsason, Vector vice president. But the main part of theconstruction won’t begin until spring 2000. “It’s a relatively easybuild so there’s really no need to start” until then.

Susan Parker

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