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Columbia Gulf Presses FERC to Rethink Tennessee Interconnect Decision

Columbia Gulf Transmission Co. last Thursday asked FERC to reconsider and stay a July decision that cleared the way for Tennessee Gas Pipeline to build an interconnect to the Columbia Gulf-operated portion of a transportation system along the coast of Louisiana that the two pipelines jointly maintain and operate.

In a 255-page plea, the NiSource pipeline subsidiary urged FERC to grant rehearing of the July 25 order to "consider compelling evidence introduced in a related Commission proceeding demonstrating that Tennessee is engaged in an ongoing effort to eliminate Columbia Gulf as a competitor in the offshore Louisiana area -- an effort that will harm not only Columbia Gulf, but also more importantly existing and future Columbia Gulf shippers."

The "compelling evidence" emerged in a case involving the South Pass System, an offshore Louisiana pipeline system that also is jointly owned by Columbia Gulf and Tennessee, Columbia Gulf told FERC [RP04-215]. It shows that "Tennessee is, in fact, engaged in a three-prong attack to drive Columbia Gulf out of business and deprive shippers of alternative pipeline options in the offshore Louisiana region."

In the July order, FERC affirmed an administrative law judge (ALJ) ruling that favored Tennessee's request for an interconnect. That order responded to a March 2004 complaint filed by El Paso Corp.'s Tennessee, accusing Columbia Gulf of engaging in a "pattern of anticompetitive conduct and practices" by denying its request to construct an interconnect from its Muskrat line to the Columbia Gulf-operated side of the Blue Water Pipeline at Egan, LA. The Federal Energy Regulatory Commission set the complaint for trial before a presiding ALJ.

The ALJ in its initial decision rejected Tennessee's claims of anticompetitive behavior by Columbia Gulf, but found that Tennessee had satisfied the five conditions necessary under FERC's regulations (the 2000 Panhandle ruling) for obtaining an interconnection.

But on rehearing Columbia Gulf contends that evidence of anticompetitive conduct by Tennessee has surfaced in the related South Pass case and needs to be closely evaluated by FERC. It further argues that FERC improperly applied the Panhandle standards to the proposed bi-directional meter at Egan in violation of the Mobile-Sierra doctrine and the Natural Gas Act, and erred by concluding that Tennessee satisfied the five conditions under the Panhandle policy.

Columbia Gulf requested a stay of the July 25 order to provide the Commission "adequate time" to review evidence developed in the South Pass case that allegedly points to Tennessee's anticompetitive behavior.

The two pipelines have coordinated operations and shared capacity on the offshore Blue Water system for more than 30 years, with Columbia Gulf operating the western shore line of the system that terminates at Egan, and Tennessee operating the eastern shore lines of the pipe segment that extends to Cocodrie, LA.

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