El Paso Proposes System-Wide Re-Allocation of Receipt Point Rights

With the FERC-ordered capacity re-assignments at the Topock, AZ, delivery points barely off the ground, El Paso Natural Gas has proposed a new plan to re-allocate shippers' receipt point rights across its entire pipeline system in an attempt to further improve delivery and scheduling.

El Paso seeks to re-allocate shippers' receipt rights in a manner similar to the approach that FERC ordered last October for the re-distribution of firm delivery rights at the Topock delivery points. In that order, the Commission directed El Paso to re-assign the delivery rights of the pipeline's shippers to more evenly match the design capacity of each Topock delivery point on the system (see NGI, Oct. 30).FERC approved the actual re-assignments of delivery rights in late February, giving the pipeline high marks for the way it carried out the task. It also ordered El Paso to come up with a proposal to address system-wide problems on its pipeline.

The proposal calls for El Paso to replace the 141 individual receipt points on its system with 20 pooling areas. With this move, contract demand (CD) and full-requirements (FR) customers would continue to have system-wide access to the supply basins (San Juan, Permian and Anadarko) that are connected to the El Paso pipeline; it just wouldn't be through 141 individual recept points [RP00-336-002]. "We found it would have been virtually impossible to divide all of those [receipt points] up in a meaningful fashion," said Robert T. Tomlinson, El Paso's director of regulatory affairs.

El Paso would allocate primary receipt rights to its CD customers equal to their individual CDs, while FT-1 FR shippers' allotments of primary rights would be based on their billing determinants (BD), the pipeline said.

Rate Schedule FT-2 shippers, whose loads are "so small," would continue to use their system-wide receipt rights. They would be served "right off the top...they would get their gas first" under El Paso's proposal, Tomlinson said. Rate Schedule FT-1 FR customers would be served next, he noted.

Under the proposal, shippers would be allowed to choose their receipt point right preferences based on their contract rights, El Paso told FERC. El Paso then would use the "same iterative process" --- the one it employed in assigning capacity to the Topock points --- to award receipt point capacity at the pooling areas. El Paso's re-allocation of delivery rights at the Topock points took effect April 1.

The allocation changes have had no impact on border gas prices, the traders said. This week's spike in border quotes has been a reflection of high California power prices that are being enhanced by the continuing loss of 3,000 MWs due to last Tuesday's downing of a line on the 500-kilovolt Pacific DC Intertie.

With respect to the new proposal, "shippers with receipt rights in a single basin will be allocated primary receipt rights to each pooling area within that basin based on the proportion of each pooling areas's design receipt capacity to the total receipt capacity within that basin," El Paso said, "All other shippers will be asked to provide an election that specifies a receipt pool where primary rights are desired, a quantity of rights desired at that location, and the location to which those receipt rights are to be delivered."

It noted that shipper elections that exceed the available capacity at a specific point will be allocated pro rata. "After processing is complete, each shipper will be notified what portion of its election was successfully allocated. This election and allocation process will be repeated until each shipper's defined volumetric entitlements (full BD or CD) have been assigned to primary receipt locations."

In order to provide "greater scheduling certainty" and to "minimize the potential for capacity constraints," El Paso seeks to expand the number of pooling points on its system to 20 from six. "Although some poolers previously have objected to enlargement of the number of pools, saying that fewer pools preserve liquidity in the gas sales market, El Paso has also been asked by its shippers to provide greater certainty within the gas transportation marketplace. This proposal recognizes the pipeline's overriding obligation to its shippers."

To carry out the system-wide allocation process, El Paso said it will provide its shippers with a "list of the receipt points within each new pooling area, the design capacity of each point, and the maximum quantity scheduled through that point during the past year." The pipeline believes its proposal will "allow all shippers an opportunity to make their preferences known at the outset while providing a mechanism for resolving the inevitable conflicts among those preferences."

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