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REX Seeks Rehearing on Restrictions on New Backhaul Service

Rockies Express Pipeline LLC (REX) has asked FERC to reconsider a recent order that removed restrictions so that customers of a new mainline displacement-only backhaul service may use secondary points to make forward-hauls.

In the June 17 order, the Federal Energy Regulatory Commission (FERC) accepted REX's tariff record for a new backhaul transportation service (BHS) on the condition that the pipeline would modify its proposal "so that a BHS service customer may use secondary points in a manner that would allow for forward-haul [transportation]." The agency said prohibiting the use of secondary points in this manner "is contrary to the Commission's policy of flexible receipt and delivery points."

REX contends that the condition imposed by FERC is unfair to its initial customers. "Rockies Express' initial shippers, including its foundation and anchor shippers, are paying substantial rates under long-term contracts that were required to support the investment of billions of dollars to construct this exceptional national asset. It is these shippers and their far-sighted commitment to the development of Rockies Express that will be unfairly undercut if the secondary forward-haul condition that the Commission has imposed is required to be implemented," REX said [RP11-2096].

REX said it proposed the new backhaul service to allow for the transportation of producers' landfill gas and other "green" gas from East Coast and Midwest markets to as far west as California. In addition, REX said it is attempting to "increase the efficiency of [its] operations by utilizing displacement to reduce the fuel required to operate the pipeline."

REX argued that the June order is a departure from prior precedent. It pointed out that in 1998 FERC accepted Tennessee Gas Pipeline's proposed limited backhaul rate schedule (Rate Schedule FT-BH), which specifically restricted shippers' ability to make forward-hauls on a secondary basis.

"Commission policy...permits pipelines to restrict secondary point rights when offering a more limited (and less expensive) backhaul service such as Tennessee's FT-BH service and Rockies Express' proposed BHS service. The Commission thus departed from prior precedent by ordering Rockies Express to remove this restriction from its proposed BHS service. Therefore the June 17 order is not the product of reasoned decision-making," REX said.

If FERC should reject REX's request related to secondary point restrictions, the pipeline asked the Commission for authorization to charge BHS shippers a higher rate -- equal to REX's maximum FTS and applicable FL&U charge -- when they make forward-hauls on a secondary basis.

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