Citing its concerns about the broad tariff changes Tennessee Gas Pipeline has proposed to protect itself from credit-risky shippers, a group of natural gas producers and marketers last week called on the Federal Energy Regulatory Commission to launch a proceeding to establish generic, uniform creditworthiness standards to be followed by interstate gas pipelines.

Indicated Shippers suggested the agency initiate a procedure, “possibly working through the North American Energy Standards Board (NAESB),” to explore uniform standards to shield gas pipelines from insolvent or credit-risky shippers. “Creditworthiness standards would be a particularly appropriate area for generic standards, and development of such standards would potentially conserve considerable time and resources for the Commission and affected entities, as opposed to [FERC addressing] individual filings by interstate pipelines,” said the group [GT02-35].

In the meantime, Indicated Shippers asked FERC to suspend the effectiveness of Tennessee’s tariff filing until after the expiration of the full five-month period or the date of a Commission order finding that the pipeline has satisfactorily addressed certain concerns, whichever is earlier. It also requested that FERC hold a technical conference to address Tennessee’s proposed tariff changes.

FERC in the past has allowed tariff changes to protect pipes from credit risks, but “some of Tennessee’s proposals appear to go beyond anything the Commission has previously approved, and would potentially empower Tennessee to convert a good-faith dispute between itself and a shipper regarding the terms of a service agreement into an issue of creditworthiness, and in doing so, threaten to discontinue services to that shipper unless it accedes to Tennessee’s position in their dispute,” Indicated Shippers said.

In its Aug. 16 filing, Tennessee proposed tariff revisions that would give it broad access to shipper financial statements and any information related to a shipper’s credit status. In addition, it wants the authority to immediately discontinue service to shippers who become insolvent or are credit risks, take title to a defaulting shipper’s gas on its system, and suspend service on all contracts if a shipper defaults on one contract (See Related Story).

Although Indicated Shippers “recognize Tennessee’s legitimate need for adequate creditworthiness provisions as a means to control risk,” the group said the tariff provisions proposed by the pipeline are far too “extensive.”

Indicated Shippers joining in the protest of the Tennessee filing were Amerada Hess Corp., Anadarko Petroleum Corp., Chevron U.S.A. Inc., ExxonMobil Gas Marketing Co., OXY USA Inc., Shell Offshore Inc., and Texaco Natural Gas Inc.

©Copyright 2002 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.