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ANR Chips Away at Competing Guardian Project

ANR Chips Away at Competing Guardian Project

ANR Pipeline slipped more than a few lumps of coal in Guardian Pipeline's stocking over the holidays' in the form of a 250-page protest and motion for dismissal filed with FERC. The Coastal subsidiary has a right to be angry at its new competitor. The Guardian project will result in the decontracting of about 650 MDth/d of ANR's firm transportation capacity by Guardian shipper and affiliate Wisconsin Gas and the loss of $54 million in annual revenue, according to ANR's calculations.

Guardian is a proposed 150-mile bypass of ANR that will provide 750 MMcf/d of firm transportation from the Chicago hub near Joliet, IL, to a connection in Ixonia, WI, with a pipeline lateral proposed by Wisconsin Gas. The project primarily will serve the Milwaukee area. If Guardian is built, ANR wants FERC to force Guardian's main shipper, Wisconsin Gas, to pay an exit fee to ANR.

ANR claims Wisconsin Gas' ratepayers will be paying between $175 million and $242 million more over the course of the 10-year agreement with Guardian than they would have to pay ANR for similar service. Foremost among its many arguments against the Guardian project, however, is the charge that the proposed project should be dismissed on jurisdictional grounds because it is split into two parts, one being a jurisdictional pipeline and the other being a non-jurisdictional lateral that will be built by Wisconsin Gas.

ANR said the proposed 38-mile lateral from Ixonia to Milwaukee is a "critical piece" of the interstate pipeline, a piece which Guardian sponsors, Wisconsin Gas parent WICOR and Northern States Power subsidiary Viking Gas Transmission, are attempting to subsidize through Wisconsin Gas' rates. Guardian is "anticompetitive," according to ANR, because it uses Wisconsin Gas' monopoly power over distribution to force its ratepayers to pay for a large portion of the proposed project, namely the Wisconsin Gas Lateral.

ANR said Commission precedent requires the two pipeline segments to be treated as one system. Even if the Wisconsin lateral is considered a separate pipeline, "standing alone it is an interstate natural gas transmission pipeline that is not exempt from this Commission's jurisdiction." ANR has filed a motion for summary disposition and dismissal of the application because it claims the application is deficient for not including the lateral.

Meanwhile, Wisconsin Gas told the Commission in supporting comments that "the introduction of Guardian as a pipeline alternative to ANR will free a significant portion of the service territory of Wisconsin Gas and others from being captive to ANR, thereby protecting them against cost shifting and cross subsidization. Guardian (with the Wisconsin Gas Lateral) will allow Wisconsin Gas and its customers to have an opportunity to obtain the benefits of procompetitive Commission policies..." Wisconsin Gas noted 84%, or 770 MDth/d, of its upstream pipeline transportation is provided by ANR, while Northern Natural and Viking Gas are capable of providing only small percentage of its needs. It also noted that the Guardian Project was the end result of a request for proposals process in which ANR participated. "Guardian gave Wisconsin Gas more competitive benefits and more beneficial choices for it and its customers than did ANR's proposals."

The Guardian project is designed to serve existing demand and in part to serve growing gas demand for power generation in Wisconsin. It should be noted that ANR also plans to build a new pipeline into Wisconsin and has teamed up with Peoples Gas to construct a system that would extend underneath Lake Michigan. ANR claims the proposed 130-mile line would not compete with Guardian. The ANR-Peoples project is expected to cost $300 million and would carry up to 1.4 Bcf/d of gas. Following environmental review, the ANR-Peoples partnership plans to file an application for the project with the FERC later this year.

Rocco Canonica

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