Just weeks after FERC suspended Transwestern Pipeline’s authority to negotiate rates based on pricing differentials due to excessive charges to Sempra Energy Trading and another transportation customer, the Commission has expressed concerns about another negotiated firm transportation contract between the Enron pipeline subsidiary and Sempra Energy.

As a result, FERC has suspended, subject to refund and further Commission action, the effectiveness of Transwestern’s tariff proposal seeking to implement two negotiated rate agreements with Sempra Energy and Calpine Energy Services LP. Although the Commission did not cite any specific problems with the Transwestern-Calpine Energy proposed negotiated arrangement, it was included in the July 25 suspension action. Transwestern had asked for the rates to take effect July 1.

The Sempra Energy and Calpine Energy transactions were not covered under the July 17 order in which the Commission prospectively suspended Transwestern’s ability to do index-based negotiated-rate agreements for a year. Transwestern submitted its proposed tariff for the two agreements in late June (see Daily GPI, July 18).

In related action, FERC has shortened the period “to and including Aug. 2” for industry to respond to notice-of-inquiry (NOI) questions about a planned review of the agency’s existing negotiated-rate policies and practices [PL02-6]. The Commission issued the NOI review in mid-July as a companion to its order on Transwestern.

Transwestern’s proposed rate of 45 cents per MMBtu/d for Sempra Energy exceeds the maximum recourse rate, similar to previous negotiated-rate transactions involving the pipeline, FERC said in its latest order [RP97-288-022]. “Our preliminary review of this filing indicates that the proposed rate may be unjust, unreasonable and unduly discriminatory. The Commission needs additional information to insure that Transwestern’s transactions were posted on its web site accurately and in a non-discriminatory manner, and the service being provided is firm service,” it noted.

It asked Transwestern to respond to a number of questions: whether the capacity contracted to Sempra Energy was posted on the pipeline’s web site, when the negotiations between Transwestern and Sempra Energy began and concluded; and whether the proposed contracts were offered at Tranwestern’s FTS-1 recourse rate. The pipeline was ordered to submit a copy of its contract with Sempra Energy, and to provide a schedule listing by day the volumes to be transported.

In addition, Sempra Energy was asked to explain why it chose a negotiated-rate contract rather than contracting for Transwestern capacity under the recourse rate; what other options were available to it for transporting its gas; and to describe the negotiations that led to the negotiated rate deal.

The Sempra Energy agreement, which would extend from July 1 of this year to Oct. 31, 2002, calls for 2,554 MMBtu/d to be delivered from a primary receipt point at the Bloomfield Compressor Station to SoCal Needles. The Calpine Energy deal, which would run for 180 months until June 30, 2017, would deliver 40,000 MMBtu/d from a West Texas pool to a primary delivery point at PG&E Topock at a negotiated rate of 38 cents per MMBtu/d. The agreements were entered into as part of Transwestern’s Red Rock expansion project, the pipeline noted.

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