ANR Pipeline has won a two-year battle at FERC to build a directinterconnect to Transcontinental Gas Pipe Line’s mainlinefacilities in Evangeline Parish, LA – near the site of an activenatural gas sales market.

On rehearing, Commission upheld a July 1998 order granting acomplaint in which ANR accused Transco of discriminating against itby denying a request to construct minor interconnection facilitiesthat would provide its shippers with direct access to gas salesmarkets on Transco’s system at Evangeline. FERC ordered Transco topermit the construction and operation of the interconnection “assoon as operationally possible.”

Specifically, the Coastal Corp. pipeline had been battling toobtain a direct connection to Station 50, which is one of severalcompressor stations on Transco’s mainline serving as poolingpoints. There, producers and marketers sell gas to LDCs and otherbuyers who hold firm capacity on Transco for shipment to downstreammarkets. The gas sale market at Station 50 is said to be a “premiumone.”

In order to get their gas to Station 50 now, ANR shippers mustdeliver gas via ANR’s existing interconnection on Transco’s CentralLouisiana Lateral at Eunice, LA, and then purchase interruptibletransportation (IT) service on Transco for a distance of about 7.4miles. So, in effect, ANR shippers currently must pay “stackedrates” for service on ANR’s existing interconnect and for serviceon Transco’s IT feeder to reach Station 50.

But the Commission last week found that ANR’s request for adirect interconnection at Evangeline was reasonable under threedifferent analyses. “First, the evidence shows that Transco hasprovided no reasonable justification for denying ANR’s request,given Transco’s history of granting such requests made by similarlysituated parties,” the order said [CP98-74]. Six pipelines otherthan ANR currently have direct interconnections on Transco’smainline in the Gulf region that were established prior toTransco’s restructuring under Order 636, and none of the shipperspay an IT rate in order to get gas to Transco’s mainline markets,according to the order.

Secondly, evidence suggests the denial of an interconnection forANR has led to “specific competitive harm to the operations ofsales markets on Transco’s mainline,” the Commission said. That’sbecause buyers at Station 50 have been barred access to thecompetitively priced gas supplies that ANR’s shippers would offer,FERC noted. Lastly, it said the establishment of the Evangelineinterconnect for ANR was required under the new five-stepinterconnection policy for gas pipelines, which FERC unveiledearlier this month.

In upholding the July 1998 decision, the Commission overturnedan administrative law judge’s (ALJ) initial findings thatcompetition hadn’t been adversely harmed at Station 50, and thatFERC’s prior approval of the IT feeder system provided “appropriatesupport” for Transco to deny ANR the Evangeline interconnect.

In the final analysis, “we are persuaded by the record in thiscase that ANR cannot offer a pipeline transportation servicereasonably competitive with those provided by Transco and otherinterstate pipelines, without the Evangeline interconnect, a minorfacility consisting of valve access to Transco’s mainline,” theorder said.

Susan Parker

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