FERC Friday gave Kinder Morgan Interstate Gas Transmission LLC the green light to bypass a Lakewood, CO-based local distribution company (LDC) in order to directly serve a customer.

Specifically, the Federal Energy Regulatory Commission said Kinder Morgan could bypass SourceGas Distribution LLC to provide direct service to Panhandle Feeders, a livestock feeding specialist in Morrill, NE. SourceGas delivered an average of 46.5 MMBtu/d to Panhandle Feeders in 2007.

“While SourceGas asserts that the new delivery point [with Kinder Morgan] will cause it to lose business, SourceGas has not presented evidence that Kinder Morgan has engaged in anticompetitive practices or undue discrimination,” the FERC order said [CP07-79].

“Further, the Commission has held in prior decisions that we are not willing to shield LDCs from the effects of competitive forces because we believe that, in the final analysis, all consumers will benefit from the Commission’s competitive policies.”

“Panhandle Feeders has evaluated its needs and requested the proposed service based on its analysis of Kinder Morgan’s ability to provide the needed service. Kinder Morgan is required to honor valid requests for service on an open-access basis.”

Kinder Morgan proposes to install a two-inch hot tap on its 16-inch diameter pipeline, along with meter and electronic flow measurement equipment and associated facilities on Panhandle Feeders’ property. Panhandle Feeders will install a 20-foot long, one-inch diameter pipeline from the Kinder Morgan delivery point to its plant. The facilities will enable Kinder Morgan to deliver up to 120 MMBtu/d to Panhandle Feeders.

SourceGas has operations in Colorado, Nebraska, Wyoming and Hermosillo, Mexico. It provides 268,000 residential, business and agricultural customers with natural gas service and operates 11,900 miles of distribution and transmission pipeline, as well as storage.

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