A group of natural gas producers and marketers, and East-of-California shippers have asked FERC to reject a tariff proposal in which El Paso Natural Gas seeks to establish procedures for reserving capacity for future pipe expansions, calling the proposal “premature” in light of all of the unresolved capacity-related cases that the pipeline is involved at the Commission.

“El Paso has not demonstrated that it has adequate capacity to serve its [existing] firm shippers, much less that it has sufficient capacity to reserve for future expansion projects, or that its firm shippers would not be impacted by reserving capacity for expansion projects,” said Indicated Shippers, a group of seven producers and marketers.

El Paso’s request should be denied at this time, Indicated Shippers noted. “Until path rights are defined on El Paso’s system, El Paso will not be able to determine which capacity is available to reserve for future expansion projects. As such, it is premature for El Paso to establish a mechanism in its tariff to reserve capacity for expansion projects when existing capacity rights of firm shippers have not [been] fully defined.”

El Paso should be permitted to re-file its proposal once the “pathing” issue is resolved, the group noted. But even then, the pipeline should be required to show that its firm customers “will not be impacted by the reservation of capacity for future expansion projects,” it said.

Under its proposal, El Paso seeks to reserve for future expansion projects unsubscribed capacity or capacity under expiring or terminating transportation service agreements that either are not subject to a right-of-first-refusal (ROFR) or are subject to an ROFR that shippers do not exercise. El Paso proposes to post the capacity for at least five business days prior to reserving the capacity. If no shipper bids on the capacity to be reserved, El Paso proposes to reserve the capacity for a maximum of one year prior to the time it files for certificate authority to build the new facilities. It will continue to reserve the capacity until the expansion facilities are placed into service [RP04-330].

The pipeline’s East-of-California (EOC) shippers also called the capacity-reservation proposal “ill-timed,” given the number of El Paso’s unsettled capacity-related cases at the Commission. They asked FERC to deny El Paso’s proposal without prejudice to the pipeline’s ability to re-file at a later date or, at a minimum, to suspend the effectiveness of the tariff proposal until the related proceedings are concluded.

El Paso claims in one case at the Commission [RP04-248] that “it anticipates that its system operations will be so strained that [it] must adopt daily balancing penalties,” while in another case [RP04-251] the pipeline “continues to address shipper concerns…regarding the effects on system reliability of El Paso’s pathing and segmentation proposals,” the EOC customers said.

“Yet, on the other hand, El Paso claims that its current operations are so smooth that it should be able to enter into new contracts for firm service based solely on an internal review [RP04-328] and, in the current proceeding, that it also has sufficient system flexibility to reserve capacity for new expansion projects for at least a full year in advance.”

These “conflicting representations” about El Paso’s system operations make it clear that the “[current] filing is premature,” the EOC shippers noted. These cases “must be resolved before the Commission [so] El Paso’s shippers can make informed decisions regarding the appropriateness of the proposals in El Paso’s capacity reservation filing.”

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