El Paso, EOC Shippers Resolve Dispute Over Access to Reserve Capacity Pool

El Paso Natural Gas and 14 East of California (EOC) customers last week filed a joint settlement with the Federal Energy Regulatory Commission, which they said represented a "fair and reasonable resolution of all issues involving access" by the EOC shippers to an agency-established temporary 110 MMcf/d capacity pool on the system.

As part of the conversion of full-requirements (FR) service to contract demand service on El Paso, the Commission in July ordered the pipeline to set up the reserve capacity pool for EOC shippers to use until El Paso puts the first phase of its three-phase Line 2000 Power-Up Project in service. The project will ultimately increase the capacity of El Paso's southern system by 320 MMcf/d.

Under FERC's plan, the reserve capacity pool initially will start out with 110 MMcf/d, but the capacity available to EOC customers in the pool will shrink to 50 MMcf/d when the first phase of the Line 2000 expansion is placed into service, possibly by late February 2004. The capacity pool will be completely eliminated when the second phase of the project goes into service, which El Paso anticipates could occur in late April 2004, and the pipeline has committed to construct the third phase.

El Paso submitted tariff sheets in August to comply with FERC's order to establish the reserve capacity pool, but the EOC shippers (or so-called "Section 9 Shippers") objected to the pipeline's proposed procedures for accessing the pool capacity, calling them "unreasonably complex and burdensome." The joint offer of settlement, which El Paso and EOC shippers have asked the Commission to approve expeditiously, grew out of a FERC technical conference in September and subsequent discussions between the parties.

Beginning Dec. 1 of this year, each EOC shipper named in the settlement will be eligible to receive at a minimum its monthly pro-rata share of the total capacity of the reserve pool. A shipper's pro-rata share will be proportionate to its monthly allocated share of the Line 2000 expansion project, according to the settlement.

With the exception of allocated Block II capacity, each EOC shipper will be required to nominate all firm entitlements under its conversion transportation service agreements before it can request capacity from the capacity pool, the agreement said. Shippers also are prohibited from releasing capacity from the capacity pool, as well as nominating capacity from the pool at the same time they are releasing any of their firm capacity, it noted.

An EOC shipper may nominate up to the entire capacity in the reserve capacity pool for service to primary and alternate points within its historic service territory, but not until the other EOC shippers have had their confirmed minimum reserve capacity pool quantities scheduled, the settlement said.

The EOC or "Section 9" shippers named as parties to the settlement include Arizona Electric Power Cooperative, Arizona Public Service Co., Pinnacle West Energy Corp., BHP Copper, UNS Gas Inc., City of Las Cruces, NM, City of Mesa, AZ, El Paso Electric Co., MGI Supply Ltd., Navajo Tribal Utility Authority, Phelps Dodge Corp., PNM Gas Services, Salt River Project Agricultural Improvement and Power District, Southwest Gas Corp. and Texas Gas Service.

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.