Columbia Gulf Transmission, a pipeline subsidiary of NiSource Gas Transmission & Storage, announced Friday that it has filed its first Section 4 rate increase with FERC in 14 years, spurred by higher costs and changing flow patterns on the pipeline grid.
“Until now we haven’t felt we needed to file one,” said Claire Burum, senior vice president of business development and regulatory affairs for NiSource Gas Transmission & Storage. But several things have changed in the intervening years — including the development of new shale basins, changed flow patterns on Columbia Gulf and increased operating costs — to warrant the pipeline seeking a rate increase.
Columbia Gulf has asked the Federal Energy Regulatory Commission (FERC) to approve a $34 million hike in its cost of service to $159 million, and a 10.5% total rate of return. The rate filing calls for a mainline zone increase from 12 cents/Mcf to 19 cents/Mcf and an onshore zone increase from 4 cents to 7 cents. Columbia Gulf is divided into two zones — the mainline zone and the onshore zone — but the pipeline expects to make it one zone, Burum said.
In response to the changing gas markets, Columbia Gulf also proposes, on a prospective basis, a new rate design to establish a single maximum recourse transportation rate for transportation anywhere on its system under a single contract and a single nomination system.
Burum said that in the past about 2 Bcf/d of natural gas entered the Columbia Gulf system from the Gulf of Mexico. Now the majority of the supplies — 1.7-2 Bcf/d — are coming into its system around Delhi, LA.
“I think there will be others [pipelines] that come forward” and ask the Commission for rate increases due to the changing flow patterns on the pipeline grid and increased environmental demands, she said. The Barnett, Fayetteville and Haynesville shale plays are feeding the Columbia Gulf line, while its sister pipeline, Columbia Transmission, has access to the Marcellus Shale.
Rate case filings have been few and far between since FERC declared nondiscriminatory open access on pipelines and dispensed with the requirement that they file a new case every three years.
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