The New York City area pocketed a number of chips from the FERC board last Wednesday, picking up two projects to expand capacity from the north onto Long Island, as well as the long-delayed Millennium Pipeline to feed western Canadian supplies into the city from the west (see NGI, Sept. 2).

The Commission issued a certificate for the Islander East project, sponsored by Duke Energy Gas Transmission (DEGT) and KeySpan Energy, to carry over 260 MMcf/d and ultimately more than 400 MMcf/d from Connecticut under Long Island Sound to connect with KeySpan’s Long Island line. It also issued a certificate for a companion project for an extension (Hubline) and expanded capabilities of DEGT’s Algonquin Gas Transmission in Connecticut to feed into the project, allowing gas from Sable Island in Nova Scotia through the Maritimes & Northeast Pipeline to be delivered into the system. Islander East will lease the additional 260 MMcf/d of capacity on Algonquin eliminating the need for 27 miles of new pipeline. Islander East has targeted an in-service date of November 2003.

In approving Islander East, the Commission said the project would “increase the flexibility and reliability of the interstate pipeline grid by offering greater access to gas supply sources and increased availability of gas for anticipated electric generation projects. Additionally, it will introduce pipeline-to-pipeline competition to eastern Long Island markets.”

Iroquois Gas Transmission’s competing eastern Long Island extension project (ELI) to increase its capacity onto Long Island through a new line under the Sound from Connecticut received a preliminary determination Wednesday. The new Iroquois line would carry up to 175 MMcf/d.

Sponsors have said it is unlikely both projects will go forward and at this point Islander East is ahead. Herb Rakebrand, Iroquois vice president of marketing, told NGI in August “if they are going to build, we won’t build. It’s the same market; there are different names on the contracts, but its just using different means to get to it.”

Iroquois already is in the process of building the Eastchester extension of its system into the Bronx from Long Island and an upstream expansion to feed over 230 MMcf/d more onto Long Island. These projects are expected to be completed in March 2003 (see NGI, Sept. 2).

In Wednesday’s order FERC rejected Iroquois’ demand that the Islander East and ELI cases be consolidated in a comparative proceeding based on the Ashbacker doctrine. Iroquois claimed the two lines would serve the same market and approving one would eliminate the need for the other.

FERC pointed out that Ashbacker was aimed at a monopoly market where “monopolistic advantages conferred on the winner would effectively bar others from entering that market….” That is not the case in a competitive market. The Commission noted the two projects would serve different shippers and “there is sufficient forecasted long-term market growth to support the Commission’s approval of both proposed projects…By approving both proposals, the Commission gives both pipelines the opportunity to compete on a level playing field, which is the essence of Ashbacker.”

The Commission noted the Islander East project would give Long Island “the benefits of pipeline-to-pipeline competition for the first time.” It also refused to delay Islander East to give the ELI project, which was filed six months after Islander East, time to catch up, noting that KeySpan Delivery says its customers need the supplies by the winter of 2003-2004.

In bypassing Connecticut’s moratorium on new Long Island Sound crossings, the FERC order invoked its own mandate and jurisdiction over interstate commerce to promote the needs of the nation as a whole. Nevertheless, the federal agency has been, and will continue to consult with state officials on environmental issues. The Commission also noted that it has included a number of environmental conditions on the Islander East project and is still weighing environmental considerations on ELI.

Greg Rizzo, DEGT senior vice president, told NGI recently. “If you look at the project as a whole, which the Commission should do when they issue a certificate, [Islander East] has firm markets signed up,” and can go forward more expeditiously. “The second huge thing is reliability; having a second crossing for Long Island is very big for reliability for the region.”

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