Midcoast Interstate Transmission and two groups oflandowners-environmentalists last week lost their year-long battlein court to overturn the FERC orders awarding a certificate toSouthern Natural Gas to build and operate a competing pipelineextension into northern Alabama.

Midcoast, which has enjoyed a monopoly over pipelinetransportation in the region for years, challenged the orders inthe U.S. Court of Appeals in Washington D.C., arguing that FERCfailed to make a “reasoned” comparison of the competingenvironmental and economic factors of Southern Natural’s extensionwith the two system alternatives it proposed – theAlabama-Tennessee Alternative and the Hartselle System alternative.It also challenged the Commission’s approval of rolled-in pricingfor the extension.

Although FERC in its decision conceded the “environmentalsuperiority” of Midcoast’s Alabama-Tennessee option, the Commissionsaid it approved the Southern Natural extension “for countervailingpolicy reasons” – namely that it would provide for the first timein nearly 50 years a competitive alternative for the captivepipeline customers of Midcoast. It conditioned Southern Natural’scertificate on the pipeline agreeing to comply with sternerenvironmental measures to even the scale with Midcoast’salternative.

The Commission’s action “strikes us as responsible agencydecision-making,” wrote Senior Judge James Buckley in the opinionissued last Tuesday. Also, he said the court couldn’t fault FERCfor rejecting Midcoast’s claims that its system alternatives wereeconomically superior, especially since Midcoast’s two largestcustomers – the municipal utilities of Huntsville and Decatur, AL -had signed long-term contracts to take service on Southern’sextension.

The construction of the extension has been completed. It extendsabout 118 miles from Tuscaloosa, AL, to Huntsville, and will carry70 MMcf/d of natural gas supplies to the municipalities ofHuntsville and Decatur.

Susan Parker

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