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ALJ Backs Transco's Refusal of ANR Interconnect

ALJ Backs Transco's Refusal of ANR Interconnect

A FERC administrative law judge (ALJ) has agreed Transcontinental Gas Pipe Line was well within its rights when it denied ANR Pipeline an additional interconnection to its mainline system in Louisiana, saying Transco's action neither was discriminatory, caused ANR to lose business nor violated antitrust principles.

In his initial decision, Presiding ALJ David I. Harfeld found Transco had refused similar requests by other pipelines in the past based on a "pre-existing" policy, which barred construction for any party of a second interconnect on a Transco supply lateral that would feed the same pooling point as an existing interconnect. ANR is seeking the additional interconnect at Evangeline Parish, LA, so that shippers can avoid Transco's IT feeder charge at its existing interconnect with Transco near Eunice, LA [CP98-74-001].

Harfeld's ruling was in contrast to the Commission's decision last July ordering Transco to build the interconnect for ANR. FERC later stayed the order and directed the ALJ to hold hearings on two specific issues in the case. Interestingly, the Commission didn't ask Harfeld to address whether or not ANR should be granted the interconnect, but he said he felt "behoove[d]" to do so anyway.

The case has captured the interest of some in the gas industry because it puts squarely before the Commission the issue of its interconnection policy under the Natural Gas Act (NGA), which requires pipes to provide interconnects solely to LDCs. The ANR-Transco case, some observers say, poses the question of whether the policy should be opened up to require interconnects for non-LDC pipeline customers also.

"The reason why this one's particularly critical is because the whole issue of pipeline interconnects ultimately will determine how competitive this industry's going to get," commented a producer source. The issue of whether FERC has the authority to order interconnects was not before Harfeld, but Transco has raised it on rehearing.

When the case comes up again, FERC may decide it has "no latitude" to make any changes to its interconnect policy under the NGA. "But if they decide to go the other way, it will be very interesting," the producer source said. It conceivably could set a precedent that would "stretch the boundaries" of the NGA. If that should happen, "I wouldn't be surprised if it [goes] to the Supreme Court," he noted.

"I'm keeping my fingers crossed hoping that the Commission will require it [the ANR interconnect]," but he questioned whether any of the other commissioners would "push the issue."

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