The Federal Energy Regulatory Commission last Wednesday okayed a certificate for Tuscarora Gas Transmission’s Wadsworth Lateral, a 14.2-mile pipeline extension and associated facilities that would increase Tuscarora’s transportation capacity by 95,912 Dth/d. The lateral would extend from Tuscarora’s mainline in northern Washoe County, NV, to an interconnect with Paiute Pipeline in Nevada.

The expansion of the 229-mile pipeline system, which extends from Malin, OR, to a growing Nevada market, would serve two new power generation facilities in Nevada near Tracy and Wadsworth. Duke Energy plans to construct a 540 MW plant near Wadsworth, and Morgan Stanley is now constructing the 360 MW Naniwa Energy facility near Tracy (see NGI, Oct. 1, 2001).

The added capacity also would supplement the growing gas distribution needs of Sierra Pacific Power Co. and Southwest Gas Corp., which collectively distribute natural gas to all of northern Nevada and portions of Northern California.

Tuscarora had said it would begin construction in April and have the expansion in service by the end of the year. The $60 million expansion is supported by long-term, firm transportation contracts ranging from 10 to 15 years.

In another action, FERC vacated the certificate it had issued to the Cross Bay Pipeline project at the request of the sponsors. Williams’ Transcontinental Gas Pipe Line, Duke Energy and KeySpan said last month they would not be going through with the project that would have provided an additional 125,000 Dth/d of transportation for Long Island and New York City markets in part because the market had not materialized as expected (see NGI, Dec. 17, 2001). In addition, the sponsors were unhappy that FERC revised their rate treatment, which the Commission said would have allowed sponsors to charge twice for the capacity. The Commission had issued a certificate last November for the project that originally was slated to go into service in November 2000.

FERC also approved a certificate for Colorado Interstate Gas (CIG) for compression and looping to expand capacity on its existing system by 282,000 Dth/d to serve electric generators and distributors along the Front Range of the Rocky Mountains. In a preliminary determination (PD) July 31, 2001, the Commission had said CIG could roll in the costs of the expansion in its first Section 4 general rate case after the facilities were in service. At that time it also noted its policy against discount adjustments related to negotiated rates service, and said in rolling in the costs CIG must use the design capacity of the proposed project to establish system wide maximum firm rates.

Since then the Commission’s negotiated rate policy has “evolved.” FERC agreed to CIG’s request for clarification of its PD to allow discount-type adjustments attributable to negotiated rate contracts for ratemaking purposes, as long as safeguards are in place to prevent cost-shifting to recourse rate customers. It also agreed that CIG is entitled to propose a rate design methodology taking into consideration seasonal variations in capacity of the new facilities at the time of a Section 4 filing.

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