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FERC Shoots Down Midcoast Project Alternatives

FERC Shoots Down Midcoast Project Alternatives

Midcoast Interstate Transmission's efforts to continue its monopoly control of the pipeline transportation market in northern Alabama fell by the wayside when FERC recently rejected its two controversial project alternatives, citing disinterest on the part of shippers.

In the first proposal, Midcoast, formerly Alabama-Tennessee Natural Gas, sought authority to build and operate two compressor units and associated facilities in northern Alabama to compete with Southern Natural Gas' proposed pipeline extension into that area. As a second option, it proposed the so-called Hartselle Alternative, which called for Sonat and Midcoast to combine their two projects - Sonat would build the first 98 miles of its northern Alabama extension, and the final leg would be built by Midcoast (an eight-mile line) to its existing Hartselle Lateral. A key problem with the latter was that Sonat was not interested in it.

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

In the initial project, the Commission chose to dismiss the application rather than put Midcoast at risk for the unsubscribed capacity. "We feel this is the most appropriate course of action under the circumstances of this case since the intended shippers have protested the proposal, and state their firm commitment to their contracts with Southern for capacity on its North Alabama Pipeline Project facilities," the order said [CP97-343]. FERC noted Midcoast could refile its application when it could show evidence of executed contracts or precedent agreements.

Similar arguments were cited by the Commission in rejecting Midcoast's Hartselle Alternative project [CP98-34]. "...Midcoast has no contracts, Southern states it does not intend to contract with Midcoast, and the customers strongly support Southern's proposal," the order noted. In addition, FERC said Midcoast failed to submit important environmental information.

Susan Parker

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