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FERC: MS Projects Not Affected By Destin Suspension

FERC: MS Projects Not Affected By Destin Suspension

FERC has ruled the six-month suspension of Destin Pipeline Co. L.L.C.'s blanket certificate authority does not apply to the construction of interconnects for two projects currently being built in Mississippi.

In an order granting clarification, the Commission said Destin could proceed with the construction of an interconnect under its blanket-certificate authority for a 1,000 MW new generation facility (Plant Daniel) being developed by Mississippi Power Co. in Jackson County, MS. It took similar action with respect to a processing plant that is being constructed by Kahuna Gas L.L.C. to treat gas produced by Rebel Drilling Co. in Wayne County, MS. Kahuna currently is building a 5.7 non-jurisdictional line from the processing facility to Destin's system.

"Because this is the first time the Commission has imposed the remedy of suspending a blanket certificate, we will not delay the subject interconnections until Destin's suspension ends in September. Accordingly, we clarify that Destin's certificate suspension does not apply to these [two] projects," the order said [CP98-238-003].

Destin and Rebel and Kahuna jointly argued the suspension of Destin's blanket-certificate authority shouldn't apply to them because their projects were begun before the suspension went into effect in mid-March. They also argued they shouldn't be punished for Destin's misconduct. Kahuna claimed it would become insolvent without a hook-up to Destin, and Rebel's gas would be shut in for a long period. Southern Company, which owns Mississippi Power, said it would be forced to halt construction on Plant Daniel.

FERC yanked Destin's blanket-certificate authority because it grossly exceeded the cost cap earmarked for construction of an offshore lateral, and for dragging its feet in reporting the cost overrun to the Commission. The maximum cost allowed by the Commission for blanket-certificate projects is $19.6 million; Destin projected the cost for its lateral would be $19.5 million.

In the end, it spent a total of $35.1 million to build the lateral to transport gas from two production platforms in the Gulf of Mexico to an offshore connection with its mainline system at its Main Pass 260 platform, and did not notify FERC of the overruns until two months after the lateral was placed into service in December 1999.

Susan Parker

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