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Complaint Against Front Range Pipeline Dismissed

Complaint Against Front Range Pipeline Dismissed

FERC last week denied a complaint in which KN Wattenberg Transmission LLC accused a western LDC and pipeline affiliates of improperly bifurcating their pipeline projects to sidestep Commission jurisdiction.

At issue are three different projects: Public Service Company of Colorado's proposed Front Range pipeline, which would extend from Rockport, CO, to deliver gas to the Denver market; a compression expansion of Colorado Interstate Gas (CIG) and Wyoming Interstate Gas Co. (WIC) that would increase deliveries of Wyoming gas supplies into the proposed Front Range pipeline; and KN Wattenberg's proposed Front Runner pipeline, which would parallel and compete with Public Service Company's Front Range line.

The Public Service Company and WIC/CIG belong to otherwise separate corporate families, but are connected in that each has an ownership interest in WYCO Development, which will own the Front Range facilities. CIG will build the proposed facilities, while Public Service Company will operate and manage them.

KN Wattenberg contends the Front Range project, which is pending before Colorado Public Service Commission, and the WIC/CIG compression project, which is before FERC, are a single, integrated project that was intentionally bifurcated. This was done, it claims, to permit the Front Range project to take advantage of the expedited review available from the Colorado PUC and to "leapfrog" KN Wattenberg's competing Front Runner project to continue its dominance over the Colorado gas market.

In its order, the Commission found that there was "coordination" between WIC/CIG and Public Service Company in the projects' development and ownership [CP98-271]. But, it added, "this provides no basis to declare the two projects to be a single interstate undertaking, since we find no evidence that the operation of the two expansions will work to frustrate our jurisdiction and regulatory oversight, or permit the project sponsors to engage in discriminatory practices..."

Public Service Company envisioned an expansion similar to Front Range in its 1994 long-range plan, FERC noted. And WIC and CIG contend their project is needed to move anticipated increases in Powder River Basin gas production to markets east of Wyoming. "We find no reason not to accept these explanations for the separately proposed projects."

The issue of "whether the two proposed projects should be viewed as one does not turn only on the question of whether they will operate entirely independently," the order noted. "Gas volumes moved by means of WIC's added compression may be delivered into the Front Range facilities without compelling us to find the two expansions to be one in the same." Instead, the Commission looked to the identities of the owners and operators of the proposed projects to determine whether the actions of WIC/CIG and Public Service Company amounted to an "unwarranted evasion of our regulatory oversight."

If WYCO Development alone had sought authorization to own and operate the two expansions, "we might deem it prudent to take a hard look at the projects' independence," FERC said. "But that is not the proposal before us." KN Wattenberg argues that WYCO Development should be the sole party seeking Commission authorization for both projects. "We disagree."

The Commission reached an entirely different decision in its precedent-setting Kansas pipelines' case in which it found that three affiliate pipelines had been acting in unison to evade FERC jurisdiction. The key difference in that case was that "the parties that sought (or held) the various authorizations and owned and operated the facilities at issue were all affiliates of the same parent corporation. The facts are different here."

Susan Parker

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