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
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
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
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
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."