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DC Court Rejects Shippers' Complaint Against Northeast Pipe

February 1, 2010
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The U.S. Court of Appeals for the DC Circuit last Tuesday dismissed a complaint by six shippers on the TransCanada-connected Portland Natural Gas Transmission System (PNGTS) in New England, noting that they can seek a remedy through FERC's rate-setting processes. The court action is related to lawsuits filed after the pipeline slashed its capacity by 20% in the aftermath of two other shippers filing for bankruptcy four or five years ago.

Headquartered in Portsmouth, NH, PNGTS is a 10-year-old, high-capacity, high-pressure interstate gas pipeline that began serving New England's growing energy needs on March 10, 1999. Connecting the TransQuebec and Maritimes Pipeline (owned by TransCanada Pipelines and Gaz Metro) at the Canadian border and the Maritimes and Northeast Pipeline at Westbrook, ME (owned by Duke Energy, ExxonMobil Corp. and NS Power Holdings) with the Tennessee Gas Pipeline System (owned by El Paso Energy Corp.) near Boston, PNGTS is situated between three major pipeline networks. TransCanada is its majority partner.

TransCanada's spokesperson said Thursday that the company cannot comment at this time because of "the current status of this issue." The court ruling appears favorable to the pipeline.

A three-judge panel of the appellate court found that the shippers failed to demonstrate how they were damaged by a Federal Energy Regulatory Commission order that allowed the New England pipeline linked to eastern Canada to scale back capacity from 210 MMcf/d to 168 MMcf/d. In 2008 the pipeline sought a FERC order to make the capacity reduction as the result of two of its major pipeline shippers filing separate bankruptcies -- Rumford Power Associates (in 2005) and Androscoggin Energy (2006).

Instead of a court remedy, the ongoing FERC rate case should be the correct forum in which the shippers can protest, the DC appeals court said. "Being forced to confront questions in a future legal proceeding does not rise to the level of injury required for Article III standing," according to the court order.

In oral arguments held last November, the shippers unsuccessfully tried to make the case that they (the six remaining shippers) would have to pick up the costs that the departing shippers were previously covering for the PNGTS pipeline. FERC's lawyer argued that the complaint was premature and said that the shippers group would have a chance to make the same case after FERC issues a decision on the pipeline's rate case.

PNGTS runs from the Canadian border through New Hampshire and Maine, where it connects with Maritimes & Northeast Pipeline and continues on a joint operation to Dracut, MA.

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