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NGPL: New MISO Markets Worsening Unauthorized Gas Receipt Woes

May 9, 2005
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Natural Gas Pipeline Co. of America (NGPL) last week said it has experienced an increase in unauthorized activity at certain electric generation facilities in recent weeks and, in certain instances, the level of available no-notice service and confirmed nominated service at specific plants has been insufficient to cover actual physical takes at the plant. The situation has been particularly acute since April 1 for certain plants dispatched under the Midwest Independent Transmission System Operator (MISO), the pipeline said.

On that date, MISO began centrally dispatching wholesale electricity and transmission service throughout much of the Midwest. But NGPL said the higher levels of plant loads that have been experienced on little or no notice recently have at times had a significant impact on the pipeline's operations.

"Because of these ongoing operational concerns, Natural will be in contact in the very near future with those power plant operators whose takes at their plant either have not been permitted under their current contractual arrangements or have been in excess of their confirmed service levels," the pipeline said. "These discussions will address possible solutions to these issues, including the availability of balancing services and other options for the management of imbalances."

NGPL anticipates that its discussions with plant operators will result in an acceptable resolution of these issues. However, in the event that NGPL continues to experience situations where a plant operator is taking gas in an unauthorized manner, NGPL said it "may have no alternative but to take additional measures to address this situation."

In particular, NGPL said point operators at power plant delivery points may be at risk of not receiving a physical delivery on any gas day for which such operators do not have in place either: (1) a firm, no-notice service for deliveries to their plant; (2) a confirmed nomination for a transport delivery to their plant; or (3) a confirmed access request for a take under an Interruptible Balancing Service applicable to the plant.

For these reasons, plant point operators were further advised to make every effort to ensure that physical takes from NGPL's system do not exceed the available level of no-notice and/or nominated-and-confirmed service at the plant on each day.

"In addition, deliveries in excess of a point operator's firm contractual no-notice rights or confirmed nominated service levels are subject to balancing service charges and overrun charges, as applicable, in accordance with the provisions of Natural's tariff."

NGPL is not the only energy firm to have encountered problems since the launch of new energy markets in the Midwest last month. Gary Rainwater, CEO of Ameren Corp., recently told investors that the company is working with MISO to resolve various issues that have emerged since the start of April, including what Rainwater described as "suboptimal" dispatching of power plants.

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