FERC last week approved a contested settlement in whichTennessee Gas Pipeline agreed to offer discounted transportationrates to shippers using the Perryville, LA, hub. This action isintended to further the development of Perryville as a marketcenter.
The settlement was supported or not opposed by a majority ofTennessee’s customers involved in the proceedings. Only the KeySpanDelivery Companies and the New York Public Service Commission(NYPSC) objected to the deal.
While the two companies did not oppose the “primary practicalconsequence” of the settlement — the discounted transportationrate on Tennessee at Perryville — they seriously doubted it wouldresolve what they saw as the greater problem: that Tennessee’s ratestructure potentially inhibits the development of market centers.
In last Wednesday’s order, the FERC found that KeySpan and theNYPSC could not challenge the portion of the settlement that dealtwith the potential anticompetitive effects of Tennessee’s ratestructure “because they were non-contesting parties to [a] 1996settlement” between the pipeline and its customers. “KeySpan andthe NYPSC are, in essence, seeking to revoke their consent to the1996 settlement after having received all of that settlement’sbenefits,” the order said. The latest settlement is a resolution ofthe concerns raised by Reliant Energy Gas Transmission during thenegotiations of the 1996 settlement, which it contested. Reliantargued that Tennessee’s use of a system-wide cost of serviceimproperly included production-area costs in its market-area rates,which it claimed curbed the development of market centers atTennessee interconnections with competing pipelines.
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