Florida Gas Transmission (FGT), by placing “onerous” conditions on AES Ocean Express LLC in its pursuit of an interconnection with FGT’s system, is frustrating the company’s plans to construct a proposed Bahamas-to-Florida line to deliver regasified liquefied natural gas (LNG) to the southern Florida market, AES Ocean Express contends.

In a complaint filed at FERC Monday, AES Ocean Express said it has tried for almost two years to finalize an agreement to interconnect with FGT in Broward County, FL, but FGT has continually demanded more restrictive requirements that are not justified under its tariff. These added requirements impose “unwarranted risks and unnecessary costs” on AES Ocean Express, which together “have [had] the effect of denying an interconnection” to the pipeline project, the company claimed.

AES Ocean Express called on the Federal Energy Regulatory Commission to break the “impasse” by ordering FGT to grant the interconnect request of the Bahamas-to-Florida pipeline project. “Without an interconnection agreement in place…Ocean Express cannot begin to make preparations necessary to begin construction” of the pipeline and complete the project by January 2007.

The project, which received a FERC certificate in January, entails the construction of the 54-mile U.S. leg of a $440 million pipeline that would transport 842 MMcf/d of regasified gas to southern Florida from a proposed LNG import terminal in the Bahamas.

“Ocean Express has acquiesced [to] many of FGT’s demands, and the parties have reached agreement on many issues, including Ocean Express’s cost responsibilities, certain operating procedures, construction arrangements and some access rights, gas quality specifications (except for temperature) to be filed by FGT as part of its tariff, and an initial maximum heat content standard… for the regasified LNG to be delivered by Ocean Express,” said AES Ocean Express, which is affiliated with Arlington, VA-based AES Corp.

But the continuing problem facing the company is “FGT’s insistence on conditions and concessions from Ocean Express that are not reasonably related to the required interconnection facilities or to operating conditions on FGT’s system,” it noted.

The latest draft of the interconnection agreement illustrates the “unreasonable demands” that FGT, which is jointly owned by El Paso and Enron, is making on the Ocean Express pipeline project, it said.

According to the complaint, FGT has conditioned the interconnection on: 1) Ocean Express delivering gas at a minimum temperature of 80 degrees Fahrenheit, although this is not specified in FGT’s tariff or required for any valid operational reason; 2) Ocean Express accepting unspecified, vague “quality” standards in addition to a comprehensive set of agreed-upon, detailed gas quality specifications relating to gas composition and heating value; 3) FGT retaining absolute authority to adopt, alter and enforce any “interchangeability” standards for LNG-sourced gas; 4) FGT retaining the discretion to “shut in” deliveries from Ocean Express for minor deviations from quality specifications; and a number of other requirements.

“FGT’s positions…confirm that it is unyielding in its insistence on unjustified conditions…By insisting on terms that shift costs and risks to Ocean Express and add uncertainty, FGT is creating barriers to an interconnection with the FGT system,” AES Ocean Express told FERC.

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