Midcoast Interstate Transmission’s efforts to continue itsmonopoly control of the pipeline transportation market in northernAlabama fell by the wayside when FERC recently rejected its twocontroversial project alternatives, citing disinterest on the partof shippers.

In the first proposal, Midcoast, formerly Alabama-TennesseeNatural Gas, sought authority to build and operate two compressorunits and associated facilities in northern Alabama to compete withSouthern Natural Gas’ proposed pipeline extension into that area.As a second option, it proposed the so-called HartselleAlternative, which called for Sonat and Midcoast to combine theirtwo projects – Sonat would build the first 98 miles of its northernAlabama extension, and the final leg would be built by Midcoast (aneight-mile line) to its existing Hartselle Lateral. A key problemwith the latter was that Sonat was not interested in it.

Both projects were last-ditch efforts by Midcoast to keep itstwo biggest customers, Huntsville Utilities of Huntsville, AL, andDecatur Utilities of Decatur, AL, on its system. The two customers,which accounted for almost half of Midcoast’s system load, stronglyopposed the projects, and instead backed the Sonat extensionbecause it would provide pipeline competition into their region forthe first time.

In the initial project, the Commission chose to dismiss theapplication rather than put Midcoast at risk for the unsubscribedcapacity. “We feel this is the most appropriate course of actionunder the circumstances of this case since the intended shippershave protested the proposal, and state their firm commitment totheir contracts with Southern for capacity on its North AlabamaPipeline Project facilities,” the order said [CP97-343]. FERC notedMidcoast could refile its application when it could show evidenceof executed contracts or precedent agreements.

Similar arguments were cited by the Commission in rejectingMidcoast’s Hartselle Alternative project [CP98-34]. “…Midcoasthas no contracts, Southern states it does not intend to contractwith Midcoast, and the customers strongly support Southern’sproposal,” the order noted. In addition, FERC said Midcoast failedto submit important environmental information.

Susan Parker

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