Several Wisconsin utilities and gas producers have asked FERC toplay it cautious when reviewing ANR Pipeline’s application for asecond capacity expansion of its existing system through northernIllinois and southern Wisconsin markets.

Although not opposed to the expansion, Wisconsin Fuel &Light, Wisconsin Gas, Wisconsin Public Service Corp., BurlingtonResources Oil & Gas and Texaco Natural Gas want the Commissionto put ANR at-risk for any costs that might result from theunder-utilization of capacity on the 194,000 Dth/d project. Theycontend that ANR hasn’t shown adequate market support to justifyrolling in the $37.5 million cost of the facilities.

The utilities believe the Midwest pipeline also should be heldat-risk for its decision to charge expansion shippers less for firmservice over its mainline from Joliet, IL, to southern Wisconsin (100% load factor rate of 10 cents/Dth plus commodity charges, ACAand fuel) than what existing shippers pay for identical serviceover the same facilities (14 cents/Dth). The producers asked thatANR be required to charge incremental rates for the expansioncapacity, and that the rates include both reservation and commoditycharges.

In its application, which was filed in early March, ANR said ithad signed precedent agreements with shippers for 94,000 Dth/d ofthe firm expansion capacity, but Burlington and Texaco adjustedthat figure downwards because one of the agreements reportedly hasnot yet received corporate approval.

“Thus, at most, only 43% (84,000 Dth/d) of the total capacity ofthe expansion project is committed under binding precedentagreements. The question this raises is whether a 43% commitment isadequate to justify the Commission’s approval of the project.The…answer to this question is ‘no’ unless the certificate isconditioned to require ANR to bear the risk of under-utilization ofthe incremental capacity,” Burlington and Texaco said in theirjoint filing [CP99-241].

They estimated that more than half of ANR’s proposed expansioncapacity (100,000 Dth/d) was not under any kind of shipperagreement – binding or otherwise. Still, ANR contends the entire project (looping, compression and associated facilities) is neededto meet anticipated market growth along its existing system fromJoliet to southern Wisconsin. It noted that its current peak-dayentitlements in Wisconsin are 2.2 MMDth/d, and that gas demand inthe state grew at an annual rate of 2.6% during the past decade.

But Burlington and Texaco don’t think evidence of past growth isenough to justify the proposed expansion – without an at-riskcondition. “…ANR arbitrarily assumes that this same growth ratecan be applied to future increases in demand in the Wisconsinmarket, [But] ANR’s arbitrary assumptions as to future growth arenot probative.” Nor were they convinced, they said, by ANR’s claimthat much of the uncommitted expansion capacity would be needed toserve anticipated increases in gas-fired power generation.

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