FERC Monday approved in part an uncontested settlement that seeks to resolve the long-running dispute over rates and expansions on joint pipeline facilities owned by Maritimes & Northeast Pipeline LLC and Portland Natural Gas Transmission System (PNGTS) in the Northeast.

The source of the companies' disagreements have stemmed from their joint ownership of a 101-mile, 30-inch diameter pipeline that extends from an interconnection with Tennessee Gas Pipeline near Dracut, MA, to interconnections with each of their wholly owned mainline facilities in Westbrook, ME.

Key provisions in the approved settlement bar PNGTS from pursuing further requests for rehearing or appeals involving FERC's decision in a Maritimes rate case [RP04-360]; require PNGTS to immediately withdraw its protest to Maritimes' Phase IV joint facilities expansion, which would allow for the delivery of regasified natural gas from the Canaport LNG project in St. Johns, NB; and establish a process for further expansion of the joint Maritimes-PNGTS facilities mainline, for an aggregate expansion of 750,000 Dth.

"The settlement provides an agreed-upon road map for future expansions of the system," the FERC order said [CP07-57].

The Federal Energy Regulatory Commission, however, rejected the parties' request for pregranted abandonment authority under Section 7 of the Natural Gas Act for certain mainline capacity that may be constructed and transferred in the future. Specifically, the settlement proposed that "if one owner constructs 'Excess Initial Expansibility' -- that is, expansion capacity in excess of that owner's share of the aggregate 750,000 Dth/d of initial expansibility (500,000 Dth/d for Maritimes and 250,000 Dth/d for PNGTS) -- the other owner has five years from the in-service date of such "Excess Initial Expansibility" to notify the constructing owner that it intends to acquire the capacity. Upon such notice, the constructing owner will transfer the capacity to the owner."

As part of their settlement, Maritimes and PNGTS acknowledged that the acquiring owner would need to seek and obtain FERC authorization prior to the acquisition of the capacity, but they asked for pregranted authorization for the abandonment of the same capacity by the transferring owner. The Commission issued a flat "no."

"Just as it would be premature for the Commission to rule at this time on a speculative future acquisition of capacity by one owner, the Commission cannot find at this time that it will be in the public interest for the other owner to abandon that same unknown increment of capacity at some unknown time in the future," the order said.

"Given that Maritimes and PNGTS acknowledge that one side of a transaction (acquisition) will need Commission authorization at the time the transfer is proposed, the Commission does not believe it will create an unreasonable level of uncertainty to require the parties to obtain authorization for both sides of the transaction at the same time."

Both Commissioners Suedeen Kelly and Jon Wellinghoff issued dissenting statements in response to the parties' request for FERC to apply the higher Mobile Sierra "public interest" standard of review to any future changes in the settlement that may be sought by a party, nonparty or the Commission. "I do not believe the Commission should approve such a provision," Kelly said.

"I believe that it is inappropriate for the Commission to grant the parties' request," Wellinghoff agreed.

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