NGI The Weekly Gas Market Report
FERC last week denied Midcoast Interstate Transmission’s requestfor a limited stay of the orders giving Southern Natural Gas(Sonat) the go-ahead to build an extension of its mainline intonorthern Alabama.
This was the latest in a string of defeats at FERC for Midcoast,which has been battling the construction of the Sonat expansion forabout three years now because it will mean the loss of two of itsbiggest customers – Decatur Utilities and Huntsville Utilities.
“…[A]lthough we recognize that Midcoast has enjoyed its statusas the sole interstate pipeline supplier to the cities ofHuntsville and Decatur for more than 47 years, Midcoast’s wish tomaintain its monopoly of that market cannot be the basis forgranting a stay of construction of Southern’s project,” the FERCorder said [CP96-153-005].
In a separate order, FERC rejected Sonat’s tariff sheets thatproposed revisions in interruptible and firm no-notice service onthe pipeline’s system post-construction of the northern Alabamaproject. The Commission reminded Sonat that it had ordered thepipeline to confine its modifications – specifically how it definedthe system benefits test in its tariff and the circumstances underwhich it would make a contribution in aid of construction (CIAC) -to firm transportation only [RP99-159].
Potential shippers said they had reservations about Sonat beingpermitted to pass through CIAC payments for the construction ofincremental facilities to other customers on its system. UnderCIAC, Sonat proposes to assume part of the costs for facilitiesthat a shipper would build on its own at or near receipt ordelivery points on the pipeline’s expansion. The Commission agreedthat CIAC costs should not be automatically passed through. “Theinclusion of the CIAC…will be subject to scrutiny in a rate casein the same manner as any other cost,” the order said. FERC plansto hold a technical conference on the CIAC proposal.
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