FERC last week rejected a proposed service agreement in whichColumbia Gulf Transmission tried to push the envelope too far bynegotiating terms and conditions of service with one of itscustomers, Entergy Louisiana Inc. (ELI)
“While the Commission is cognizant that it is currentlyevaluating the possibility of implementing policies that allownegotiated terms and conditions of service” in the mega-notice ofproposed rulemaking, it reaffirmed that its current policy stillprohibits customization of service [RP96-369-003].
The proposed service agreement, which was filed at FERC inNovember, called for ELI to pay a rate in excess of Columbia Gulf’scurrent maximum tariff rate for up to 100,000 Dth/d ofinterruptible transportation service, while at the same timeagreeing to waive its right to designate additional secondaryreceipt or delivery points. The negotiated rate was $0.0550/Dth,with an annual charge adjustment of $0.0022/Dth.
The proposed negotiated deal raised a red flag with the ProcessGas Consumers Group, which questioned what benefit ELI wouldreceive from the pipeline in return for paying an above-maximumrate. The Commission agreed that the question was a “legitimate”one, particularly since ELI appeared to be agreeing to reducedflexibility of service in exchange for the higher rate.
“The Commission’s concern is that there be full disclosure [bypipelines] of the essential conditions involved in negotiated-ratetransactions, including a specification of all considerationconnected with the transaction…” This includes filing at FERC”any other agreement, understanding, negotiation or considerationlinked to the agreement,” it said.
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