FERC on Wednesday established a hearing to resolve a flap over Tennessee Gas Pipeline’s bid to build an interconnect to a pipeline along the coast of Louisiana that is jointly maintained and operated with Columbia Gulf Transmission. The Commission, however, suspended the start of the hearing while the two pipeline companies engage in settlement talks before a settlement judge.

The order calls for Chief Administrative Law Judge Curtis Wagner to appoint a settlement judge within 10 days. The settlement judge was directed to report to FERC and Wagner on the status of the negotiations in 45 days. If a settlement appears likely, Wagner can approve negotiations to continue for another 30 days. But if resolution is unlikely, Wagner “shall assure expeditious litigation of the matters raised on complaint,” the order said [RP04-215].

In a complaint filed at the Commission in mid-March, El Paso’s Tennessee Gas accused Columbia Gulf of engaging in a “pattern of anti-competitive conduct and practices” by denying its request to construct an interconnect from its Muskrat line to the Columbia Gulf-operated side of the Blue Water Pipeline (BWP) at Egan, LA (see Daily GPI, March 16). It asked the agency to permit it to build the Egan interconnect and bar continuation of the alleged “unlawful and anti-competitive practice” of Columbia Gulf.

“The Commission seeks to resolve this proceeding in a manner assuring the most efficient use of the BWP by its operators in response to the markets they serve. [But] it is currently not clear that a ruling on the merits of the specific remedy sought by Tennessee would achieve that goal,” the agency said in Wednesday’s order.

The two pipelines have coordinated operations and shared capacity on the offshore Blue Water system for more than 30 years, with Columbia Gulf operating the western shore line of the system that terminates at Egan, and Tennessee operating the eastern shore line of the pipe segment that extends to Cocodrie, LA.

This long operating history between Tennessee and Columbia Gulf “would not have been possible unless the parties were able to work together efficiently and show appropriate regard for each other’s interests,” the order said. “In light of this history, the public interest requires measured and complete efforts at settlement of a serious and complex intra-partnership controversy now before us. We are not persuaded that such efforts have been made.”

Tennessee claims the sought-after interconnect would provide operational efficiencies for the entire Blue Water pipeline system. In addition, it “would allow Tennessee to maximize the use of its share of capacity in the BWP, as well as provide Tennessee and its shippers with operational benefits,” the pipeline told the Commission, It said it satisfied the five conditions required for an interconnect under FERC’s policy. I

The pipeline complained that the alleged uncompetitive conduct by Columbia Gulf was at the core of the pipeline’s refusal to allow an interconnect at Egan. Specifically, it accused Columbia Gulf of giving its BWP shippers “undue preference” in scheduling priority over Tennessee’s firm shippers, and of “[denying] substantial new supplies access to Tennessee’s western shore line capacity…so that the new supply would instead be received by Columbia Gulf through another pipeline.”

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.