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FERC Conference to Explore Columbia Tariff Filing, Complaint

July 7, 2008
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FERC last Wednesday directed staff to convene a technical conference to resolve a tariff dispute between Columbia Gas Transmission and several of its shippers, which claim that the pipeline's proposed tariff changes would seriously impair their existing ability to schedule primary firm transportation service. Staff was ordered to file a report on the results of the conference within 120 days.

Columbia Gas, a pipeline subsidiary of NiSource Inc., last month filed tariff sheets seeking to clarify the nature of the Master List of Interconnect (MLI) points and their use as identifiers of virtual scheduling points in its tariff. A number of the pipeline's shippers responded with a Section 5 complaint, charging that Columbia intended to unilaterally implement new primary delivery points without seeking permission from the Federal Energy Regulatory Commission. They argued that the pipeline's action would be a violation of both the Natural Gas Act (NGA) and the agency's Section 284 regulations (see NGI, June 16).

The complainants include Atmos Energy Marketing LLC, BP Energy, Delta Energy LLC, Hess Corp., Honda of America Manufacturing Inc., Integrys Energy Services, Interstate Gas Supply Inc., National Energy Marketers Association, the Ohio Farm Bureau Federation and Sequent Energy Management LP. The shippers hold in excess of 130 forward haul contracts with Columbia representing an aggregate maximum contract quantity of more than 400,000 Dth/d.

The shippers urged the Commission to either reject Columbia's tariff proposal or suspend it and schedule a complaint proceeding or technical conference.

"The Commission finds that it is necessary to hold a technical conference where the details of [Columbia's] instant NGA Section 4 proposal and the NGA Section 5 complaint may be explored at greater length. Accordingly, the Commission will accept the...tariff sheets and suspend them until Dec. 1, 2008, subject to the outcome of the technical conference," the order said [RP08-401, RP08-403]. Columbia had asked for its tariff proposal to take effect July 5.

"Based upon a review of the filing, the Commission finds that [Columbia's] proposed tariff sheets have not been shown to be just and reasonable, and may be unjust, unreasonable, unduly discriminatory or otherwise unlawful" and consequently will be suspended for the maximum five-month period, the order said.

"Among other things, the technical conference should explore how Columbia's proposal will affect shippers' existing ability to schedule service on a primary firm basis."

In its tariff proposal, "Columbia appears to assert that, in its sole discretion, it may remove from its Master List of Interconnections an MLI that currently covers a number of physical points and replace that MLI with separate MLIs for each of those physical points. If an MLI thus removed from the Master Lister of Interconnections is currently included as a scheduling point in an existing shipper's service agreement, that shipper will presumably have to replace the MLI listed in its service agreement with one or more of the new MLIs," the order said.

"Columbia must be prepared to explain at the technical conference: 1) what process it proposes to use to carry out the change in such a shipper's agreement; and 2) whether and how the change in the shipper's service agreement will affect the shipper's existing ability to schedule service on a primary firm basis at the physical points covered by the replaced MLI," FERC said.

Columbia seeks to add language in its tariff to clarify the distinction between "measuring points" and "scheduling points." The pipeline explained that measuring points are a firm shipper's primary receipt and delivery points under its service agreement and, in all cases, these point are individual physical points. In contrast, scheduling points are "virtual" points to be used by shippers when scheduling service. A scheduling point may represent either a single or many physical points in one operationally distinct area of Columbia's system.

Columbia asserts that the MLI that it maintains is a list of scheduling points, not measuring points. As such Columbia's MLIs appears to be a list of virtual points, not physical points, the order observed. The pipeline further contends that it may update the MLI list on its electronic bulletin board without obtaining FERC authorization and, therefore, the proposed revisions appropriately clarify that it has sole discretion to modify the MLIs listed in the service agreements as scheduling points without modifying the service agreements, it noted.

"Columbia [argues it] is not taking primary firm capacity from customers who have it under contract. Columbia asserts that although the virtual MLI references are changing, there will be no change to a customer's primary firm capacity under contract and its ability to nominate and use that capacity with the same primary firm priority it now enjoys because Columbia is simply changing the virtual reference point from one MLI to another virtual reference point."

However, the Columbia shippers counter that the pipeline is proposing to change unilaterally hundreds of contractual obligations between Columbia and its shippers without the consent of the shippers. Several shippers, including Orange and Rockland Utilities Inc., took exception to Columbia's proposed language that it said would give the pipeline "sole discretion" both to change the points posted on the MLI and to change contracts in violation of Commission policy.

The Columbia shippers contend that Columbia's proposal abrogates currently effective service agreements and restricts service flexibility. "Columbia would increase the number of primary delivery points on its system from 255 to 371, an increase of 116 delivery points. In practical terms, this increase means that firm shippers that schedule gas to a single primary point under a current contract will henceforth be required to schedule to as many as 10 different delivery points," the shipper group told FERC.

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