FERC last week changed its tune and cleared the way for NorthernNatural Gas to acquire off-system, interruptible capacity fromthird-party pipelines. On rehearing of a July order, the Commissionfound that since Northern Natural sought the IT capacity to augmentits own operations, rather than for the purpose of re-marketing it,its request did not raise the concerns cited in a 1997 TexasEastern Transmission case. There, FERC feared that third-partypurchases could lead to preferential treatment for purchasingpipelines and could limit the capacity choices of other customerson third-party systems.
But these issues were “inapplicable” in the Northern Naturalcase, the FERC order said [RP98-341-001]. “The factor thatdistinguishes Northern’s proposal here from that in Texas Easternis that the off-system capacity to be obtained by Texas Easterncould have been re-marketed to other shippers, while in Northern’sproposal says the off-system capacity will not be re-marketed andis only for operational use.”
The Commission’s decision in Texas Eastern was remanded by theD.C. Circuit Court of Appeals this year. The court said FERC hadnot adequately explained why interstate pipelines had to seekadvance Commission approval to acquire off-system capacity whileother parties didn’t.
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