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VA Distributor Claims Columbia Not Fulfilling Service Obligations in Peak Winter Months

VA Distributor Claims Columbia Not Fulfilling Service Obligations in Peak Winter Months

Norfolk,VA-based Virginia Natural Gas Inc. (VNG) has accused Columbia Gas Transmission pipeline of failing to meet its firm service obligations during peak winter months due to poorly maintained facilities. As a result, the local distribution company (LDC) said it suffered damages of more than $37 million because it was forced to pay for firm service that Columbia Gas did not deliver, and had to scramble elsewhere to meet the gas needs of its firm customers.

In a nearly 300-page complaint filed Tuesday at FERC, Virginia Natural Gas charged that Columbia Gas "has repeatedly and without lawful explanation failed to meet [its] firm service entitlements set out in the certificate authorizing service to VNG" from Columbia's peak-shaving liquefied natural gas (LNG) facility in Chesapeake, VA; "failed to maintain deliveries at the required minimum pressure level established" in certain firm service agreements; and "for a period curtailed, severely if not entirely, VNG's ability to withdraw natural gas from storage."

Many of the alleged violations occurred during the 2003 winter heating season, said Virginia Natural Gas, which serves 250,000 gas customers in southeastern Virginia [RP04-139]. The distributor, a subsidiary of AGL Resources Inc., called the alleged violations "egregious because they occurred at times of peak demand when this capacity was critical to meeting the needs of VNG's firm customers."

In a press statement issued Wednesday, Columbia Gas said it operated a "safe and reliable pipeline, especially during extreme weather conditions such as those experienced" last winter. It noted it was reviewing VNG's complaint, and would submit a "comprehensive and detailed response" to FERC.

Virginia Natural Gas said it incurred the $37 million in damages because it was forced into "purchasing more costly gas supplies, [using] more costly alternatives to LNG, such as activating and operating its propane facilities, and disrupting service to industrial customers on VNG's Southern System to borrow their gas to serve VNG's high-priority residential and small commercial customers." It asked to be reimbursed for the damages.

The LDC called on the Commission to put a stop to the alleged violations. "On a prospective basis...VNG requests that the Commission immediately require Columbia to take all necessary actions, including the construction or repair of facilities without additional cost to VNG or Columbia's other customers, to ensure that Columbia has the requisite facilities in place so that it can meet its firm obligations to VNG each and every day."

FERC should order the repairs and construction to be completed Oct. 31, 2004, it noted. Subsequently, the pipeline should be required to submit periodic progress reports.

"Absent Commission action, a clear signal will be sent that pipelines may refuse to expend the necessary capital to maintain their facilities or may operate their facilities in a cavalier fashion, even when such behavior results in an unexcused and repeated curtailment of firm service during critical periods of the year," Virginia Natural Gas noted.

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