Natural Gas Pipeline Company of America’s (NGPL) proposal tospecify certain types of discounts in its tariff and avoid seekingup-front FERC approval for each transaction scored a partialvictory. But nearly identical proposals of three El Paso Energypipelines were rejected as being too vague, and the trio was toldto try again.

In its July 1 filing, Natural proposed a number of tariffchanges to its pro forma service agreements that would enable it totailor discount rates to specific market and business conditions.By using a cookie-cutter approach, the pipeline had sought toescape filing each individual discount deal up front that deviatedfrom the terms and conditions of its pro forma service agreements.

The Commission approved several of Natural’s volume-relateddiscount provisions but excluded provisions concerning capacitysegmentation and rate components [RP98-310]. As a result of theorder, NGPL contracts that discount specific volumes in conformancewith the examples listed in the pipeline’s revised pro formaagreements will not have to be submitted to FERC prior to adiscount taking effect. A discount still must be posted at theCommission after the fact, however.

In separate orders, FERC found that the types of discountslisted in the proposed amended rate schedules of Tennessee GasPipeline (RP98-332), Midwestern Gas Transmission (RP98-327) andEast Tennessee Natural Gas (RP98-333) were “overly broad andill-defined” to the point that “almost any discount arrangemententered into could fall within this list.”

The three El Paso Energy pipelines had asked the Commission toamend their firm rate schedules and related transportationagreements to reflect several types of discounts: 1)point-specific; 2) volume specific; 3) discounts based on avariable reservation/commodity charge allocation; and 4) authorizedoverruns. They also sought to revise their IT rate schedules andrelated transportation agreements.

FERC, however, left open the door for Tennessee, Midwestern andEast Tennessee to re-file their proposals to “specifically defineeach type of discount proposed…For example, [a] pipeline couldlist in its tariff specific types of volume-related discounts itmay grant such as 1) a specified discounted rate will apply only ifspecified volumes are achieved, and 2) a specified discounted ratewill apply in a specified relationship to the volumes actuallytransported.”

Susan Parker

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