Wisconsin Gets Major Gas Pipeline; FERC Approves Guardian Project

Over bitter opposition from ANR Pipeline, the Federal Energy Regulatory Commission issued a certificate to the 149-mile Guardian pipeline project, giving the upper Midwest another major gas transporter.

Guardian will be capable of delivering 750,000 Dth/d from interconnections with Alliance, Northern Border, Midwestern Gas Transmission, and Natural Gas Pipeline of America. FERC concluded that "on balance, the proposed Guardian pipeline would provide substantial public benefits with minimal adverse impacts."

The $224.3 million pipeline will run from the Chicago hub near Joliet, IL, through northern Illinois and southern Wisconsin to Ixonia, WI. It is expected to be in service in November 2002. The project is an outgrowth of a June 1998 request for proposals from Wisconsin Gas, the state's largest gas distributor. Wisconsin Gas put out the RFP to look for alternatives to its main transporter ANR Pipeline. It chose a proposal by CMS Energy and Viking Gas and signed a contract for 650,000 Dth/d. Wisconsin Gas' parent company, Wicor Inc., later took a one-third stake in the project. Wisconsin Gas plans to build a new lateral on its distribution system to connect to Guardian at Ixonia.

Contrary to the comments of ANR Pipeline, the Commission found that Guardian was not the product of unfair and anti-competitive behavior. In its protest and request for rehearing, ANR had provided evidence showing the Guardian project would force Wisconsin Gas ratepayers to pay a total of $175-$242 million more than if they continued receiving service through ANR. The company also charged that Wisconsin Gas' selection of Guardian was not the product of prudent or fair analysis of competitive options but rather was the product of anti-competitive self-dealing between the LDC and its parent company.

However, FERC said the choice of Guardian over ANR was a reasonable business decision given that Wisconsin Gas' contracts with ANR were expiring, that it had to make a long-term commitment for a substantial amount of transportation capacity and that it desired the benefits of pipeline competition. ANR, which delivers most of the gas consumed in the State of Wisconsin, lowered its rates because of competition with Guardian. "Over the long term, in order for shippers to have true competitive pricing there needs to be more than one pipeline competing to provide service," FERC said.

ANR also warned FERC the Guardian project would lead to significant turned back capacity on its system. But the Commission questioned how ANR could be making that argument at the same time it was filing several expansion projects to meet increasing gas demand in Wisconsin.

"We find subsequent events generally contradict ANR's level of concern over the impact the proposed Guardian facilities will have on its pipeline and its customer," FERC said in its draft order on rehearing and issuance of a final certificate. "Accordingly, we find the impact of the proposed Guardian pipeline on ANR will be minimal."

Although FERC received numerous comments from landowners in opposition to the project, it concluded the impact would be minimal because Guardian agreed to 20 out of 34 route changes and because 90% of the project runs through farmland.

Rocco Canonica

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