ANR Pipeline last week won a two-year battle at FERC to build adirect interconnect to Transcontinental Gas Pipe Line’s mainlinefacilities at Evangeline Parish, LA — near the site of an activenatural gas sales market.

On rehearing, the Commission upheld a July 1998 order granting acomplaint in which ANR accused Transco of discriminating against itby denying a request to construct minor interconnection facilitiesthat would provide its shippers with direct access to gas salesmarkets on Transco’s system at Evangeline.

Specifically, the Coastal Corp. pipeline has fought to obtain adirect connection to Station 50, which is one of several compressorstations on Transco’s mainline serving as pooling points. There,producers and marketers sell gas to LDCs and other buyers who holdfirm capacity on Transco for shipment to downstream markets. Thegas sale market at Station 50 is said to be a “premium one.”

In order to get their gas to Station 50 now, ANR shippers mustdeliver gas via ANR’s existing interconnection on Transco’s CentralLouisiana Lateral at Eunice, LA, and then purchase interruptibletransportation (IT) service on Transco for a distance of about 7.4miles. So, in effect, ANR shippers currently must pay “stackedrates” for service on ANR’s existing interconnect and for serviceon Transco’s IT feeder to reach Station 50.

But the Commission last week found that ANR’s request for adirect interconnection at Evangeline was reasonable under threedifferent analyses. “First, the evidence shows that Transco hasprovided no reasonable justification for denying ANR’s request,given Transco’s history of granting such requests made by similarlysituated parties,” the order said [CP98-74]. Six pipelines otherthan ANR currently have direct interconnections on Transco’smainline in the Gulf region that were established prior toTransco’s restructuring under Order 636, and none of the shipperspay an IT rate in order to get gas to Transco’s mainline markets,according to the order.

Secondly, evidence suggests the denial of an interconnection forANR has led to “specific competitive harm to the operations ofsales markets on Transco’s mainline,” the Commission said. That’sbecause buyers at Station 50 have been barred access to thecompetitively priced gas supplies that ANR’s shippers seek tooffer, FERC noted. Lastly, it said the establishment of theEvangeline interconnect for ANR was required under the newfive-step interconnection policy for gas pipelines, which FERCunveiled last week.

In upholding the July 1998 decision, the Commission overturnedan administrative law judge’s (ALJ) initial findings thatcompetition hadn’t been adversely harmed at Station 50, and thatFERC’s prior approval of the IT feeder system provided “appropriatesupport” for Transco to deny ANR the Evangeline interconnect.

“We are persuaded by the record in this case that ANR cannotoffer a pipeline transportation service reasonably competitive withthose provided by Transco and other interstate pipelines, withoutthe Evangeline interconnect, a minor facility consisting of valveaccess to Transco’s mainline,” the order concluded.

The Commission also rejected Transco’s claim that it partlydenied ANR’s request for the Evangeline interconnect because itwould have led to a revenue loss on its IT Feeder system. As theFERC staff noted, “six other interstate pipelines currently usemainline interconnects [on Transco]…..but no evidence indicatesthe extent of even arguably identifiable business loss from thesepipeline competitors,” the order noted. If anything, “Transco hasaccorded itself an anti-competitive preference…..to assure thatits own IT service is used in lieu of the potential alternativeproposed by ANR.”

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