Dynegy Inc. told FERC last week it’s becoming alarmed at thegrowing number of varying Y2K contingency plans being filed bypipelines. The Commission should agree to allow one set ofprocedures for the entire industry, Dynegy suggested. Otherwisethere could be a state of panic on New Year’s eve when shippershave to deal with multiple sets of Y2K emergency nominationprocedures.

Y2K contingency plans have been filed by Transcontinental GasPipelines, Natural Gas Pipeline Company of America and the rest ofthe Kinder Morgan (formerly KN Energy) family of pipelines,TransColorado Gas Transmission, Columbia’s transmission companiesand a group of pipelines owned by Southern Natural Gas. All seekwaivers of FERC regulations and nominations procedures to implementsome form of emergency nomination plans in case there are computershutdowns or other Y2K-related problems on Jan. 1. All theproposals, however, differ in certain ways.

For example, Columbia proposes to suspend the 5 p.m. CCT(Intraday 2) and 6 p.m. CCT (Evening) nomination cycles on Dec. 31″in order to allow the Columbia pipelines adequate time to performthe necessary computer system back-ups and system statuschecks…..” Meanwhile, NGPL, KNI, Trailblazer, Stingray and theother Kinder Morgan pipelines are proposing a “surgical strike” toremove four nominations cycles: the two evening noms on Friday Dec.31 and the two morning noms periods on Saturday Jan. 1. The KinderMorgan pipes said they “have no reason to believe that theirtransition to Y2K will not be entirely successful.” It’s just aprecaution. Besides, “no shipper will be unduly inconvenienced;shippers still will have sufficient opportunities to makenominations for the gas days affected” through the two nominationperiods left on each of those days, the pipelines told FERC.

Cibola Energy Services called it a “potentially dangerous curefor a presumptively healthy patient… Natural describes itsproposal as a ‘surgical strike.’ In fact that proposal is moreaptly characterized as a scatter shot attack on the Y2K enemy thatNatural claims already to have defeated. Natural’s suspension ofnomination rights does, however, pose the potential for significantcollateral damage to Natural’s shippers and the markets theyserve.”

Dynegy agreed, adding that it is concerned that to the extenteach pipeline comes up with its own plan, “a hectic time of theyear during the winter heating season will become even more hecticfor schedulers trying to remember the details and intricacies ofeach pipelines Y2K contingency plan. In addition, the nationalpipeline grid that the industry has endeavored to create willunravel when the nominations cannot be confirmed due to differentbusiness rules being applied along the grid.

“In order to avoid any additional, unnecessary confusion on thepart of shippers on these various pipeline systems, the Commissionshould require Applicants’ plan and all future Y2K contingencyplans to adopt” one methodology. Dynegy also suggested theCommission require all pipelines to file their requests by Nov. 1and include in them a waiver of imbalance penalties and a plan toperform after-the-fact reallocation to match scheduled capacitywith actual shipper use. Dynegy noted the Commission already toldTransco it could not impose penalties for imbalances created duringthe contingency period.

Furthermore, Dynegy suggested, the Commission should requirethat pipelines accept nominations by phone, fax and over theInternet so that shippers who have experienced Y2K problems oftheir own have some flexibility to deal with the situation.

Rocco Canonica

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