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FERC Rejects Columbia's Negotiated Terms

FERC Rejects Columbia's Negotiated Terms

FERC last week rejected a proposed service agreement in which Columbia Gulf Transmission tried to push the envelope too far by negotiating terms and conditions of service with one of its customers, Entergy Louisiana Inc. (ELI)

"While the Commission is cognizant that it is currently evaluating the possibility of implementing policies that allow negotiated terms and conditions of service" in the mega-notice of proposed rulemaking, it reaffirmed that its current policy still prohibits customization of service [RP96-369-003].

The proposed service agreement, which was filed at FERC in November, called for ELI to pay a rate in excess of Columbia Gulf's current maximum tariff rate for up to 100,000 Dth/d of interruptible transportation service, while at the same time agreeing to waive its right to designate additional secondary receipt or delivery points. The negotiated rate was $0.0550/Dth, with an annual charge adjustment of $0.0022/Dth.

The proposed negotiated deal raised a red flag with the Process Gas Consumers Group, which questioned what benefit ELI would receive from the pipeline in return for paying an above-maximum rate. The Commission agreed that the question was a "legitimate" one, particularly since ELI appeared to be agreeing to reduced flexibility of service in exchange for the higher rate.

"The Commission's concern is that there be full disclosure [by pipelines] of the essential conditions involved in negotiated-rate transactions, including a specification of all consideration connected with the transaction..." This includes filing at FERC "any other agreement, understanding, negotiation or consideration linked to the agreement," it said.

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