FERC Thursday approved El Paso Natural Gas pipeline’s request for a waiver of $6 million in penalties incurred by its shippers during the major chill in the Southwest last February, which forced El Paso to declare an emergency on its system.
El Paso told the Federal Energy Regulatory Commission (FERC) that its shippers had incurred $6.9 million in penalties during the first week of February, but it didn’t believe that all warranted waivers. The pipeline said it would adjust shipper invoices within 45 days of the Commission order.
“Because we find El Paso’s proposed waiver of its penalty provisions is reasonable and unopposed, we shall not impose the further changes sought by certain shippers,” the FERC order said [RP11-2288].
“The penalty waiver is supported by the acute stresses on El Paso’s system during the February weather event, which made it extremely difficult and often impossible for both the pipeline and its shippers to operate normally,” the order said. The Commission agreed with El Paso’s position that even though penalties were being waived, the shipper would still be an “offending” shipper under the pipeline’s tariff, and thus would not be allowed to share the penalty amounts with El Paso and the “non-offending” shippers (see Daily GPI, Aug. 10).
“The fact that a penalty-triggering offense occurred is separate and distinct from the waiver of the penalties arising from that offense. The Commission, therefore, finds that El Paso may waive penalties for a shipper but still reasonably classify that shipper as having incurred said penalties under its tariff,” the order said.
On Feb. 2, severe temperatures in Arizona, New Mexico and Texas caused dramatic demand spikes, well freeze-offs and equipment outages due to rolling power blackouts, which forced El Paso to declare a critical operating condition (COC) on its system. On Feb. 3 and 4, El Paso said it continued to experience high overpulls of gas at delivery locations and low levels of gas receipts into the pipeline. While El Paso lifted the emergency COC on Feb. 5, as gas demand began to decrease, shipper nominations continued at previous high levels. The pipeline responded by declaring a strained operating condition (SOC). El Paso shippers incurred significant penalties in their efforts to meet gas demand in February.
El Paso said it “determined that its customers could not have reasonably anticipated, and were generally unable despite their best efforts, to respond to the confluence of events that occurred the first few days of February,” the order said.
El Paso sought waiver of all COC penalties and charges that were incurred by customers on Feb. 2 and 3. These penalties and charges include critical condition MDO/MHO violation penalties, hourly scheduling penalties, daily unauthorized penalties and COC daily imbalance charges, according to the order.
El Paso said its linepack reached its lowest level on Feb. 4 but began to improve when certain shippers offered assistance by packing the pipeline, which helped to mitigate the loss of linepack. El Paso proposed waiving penalties for hourly scheduling, MDO or MHO violations for those shippers. In addition, because it was daily “overpulls” that continued to harm the El Paso system on Feb. 4 (i.e., shippers taking gas supplies in excess of supplies delivered to the pipeline), El Paso proposed to bill and collect the COC daily imbalance charge rather than assess any higher penalty amounts for the shippers that continued to take the gas.
The pipeline also sought a limited waiver of its SOC daily imbalance penalties on Feb. 6 and 7 due to an error in its transportation computer system.
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