Tennessee: Tariff in Sync with MA Unbundling

Tennessee Gas Pipeline contends its tariff limitation on upstream capacity releases "neither frustrates nor hinders" the drive towards competition in the retail natural gas market in Massachusetts, as a small LDC has claimed.

In a complaint filed last month, Fitchburg Gas and Electric Light argued it would be penalized by the pipeline --- specifically, its daily withdrawal capability from storage could be cut by more than half this winter --- if it assigned its firm upstream pipeline and/or storage capacity rights to competing marketers so they could serve former LDC sales customers as ordered by the Massachusetts Department of Telecommunications and Energy (DTE).

In its reply on Monday, Tennessee countered that its tariff, which it noted has been approved by FERC, "does not prohibit the release of capacity required by the 1999 DTE order." In fact, a review of the DTE order and Tennessee tariff "confirms that there is no conflict whatsoever" between the two, it told the Commission [RP01-87]. Further, Tennessee argued that other New England LDCs have addressed the challenges of retail unbundling without requiring Tennessee to modify its tariff.

Fitchburg Gas of Fitchburg, MA, had asked FERC to act on its complaint by Dec. 1, the day the DTE had ordered mandatory capacity assignment to begin in the state. But Tennessee has argued that such fast-track processing was "inappropriate."

At the center of the dispute is Tennessee's rate schedule for firm storage services, which Fitchburg Gas says presents storage customers with a Hobson's choice --- either forfeit their rights to release capacity upstream of storage or become subject to so-called "Ratchet II" limitations on storage withdrawal during the winter months (see Daily GPI, Nov. 15).

Under the tariff in question, Tennessee shippers who forfeit their upstream capacity-release rights during the winter months are entitled to exceed the 110% "Ratchet II" maximum withdrawal level on the pipeline. But those who refuse to give up their upstream capacity-release rights during the winter are limited in their withdrawal capability from storage.

Fitchburg said it had asked Tennessee for a "limited waiver" of its tariff to comply with the DTE order, but it claimed the pipeline refused. Tennessee recalled events differently, however. It noted it offered the LDC "several alternatives" to "reasonably preserve the flexibility which Fitchburg seeks without degrading service to other [firm storage] customers." But Fitchburg rejected the offer and filed its complaint instead, according to the pipeline.

Tennessee said the sole reason for the tariff restriction is operational --- to maintain the integrity of its system. "By forfeiting their ability to release capacity upstream of storage, [firm storage] customers provide Tennessee with operational reserve capacity that it may use to replenish gas in storage and thereby maintain adequate storage levels to provide full excess deliverability rights for all customers."

If all Tennessee shippers were allowed to exceed the 110% limitation irrespective of whether they forfeited their upstream capacity-release rights during winter, "Tennessee would be unable to refill the storage because the upstream capacity would be unavailable," the pipeline said.

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