The alliance of Public Service Co. of Colorado (PSCo) andColorado Interstate Gas (CIG) have launched the operation of their53-mile, $25 million Front Range Pipeline stretching from theWyoming border south to Platteville, CO, and effectively haltingdevelopment of a competing 109-mile Front Runner Pipeline, proposedby Denver-based KN Energy.
Front Runner, which also would have fed Wyoming gas into theDenver area, is officially “delayed,” the company said, althoughthe pipeline has made the regulatory circuit, and has go-aheads allaround. It did lose out recently however, on a plea to the FederalEnergy Regulatory Commission that would have improved profitabilityof the line. In a Nov. 10 rehearing order (CP98-49-002) FERC heldto its earlier refusal to allow an increased price on the transferfrom an affiliate of older facilities to be incorporated in the newline. The Commission held to its net book value requirement forsales between affiliates, effectively wiping almost $1.3 millionout of the rate base of the $31 million pipeline.
It was forecast to be in service for this heating season, KNofficials said, but the company made a “market decision” toimplement a delay after the Front Range line opened. The newoperational date for Front Runner is mid-1999, KN said.
However, there is no guarantee KN will undertake construction ofFront Runner, the company said. The start of construction willdepend on several conditions. The company wants to make sure the”market is there” before it builds the pipeline, but other dynamicsare at play and could be favorable for KN. PSCo just released anational solicitation to private generators for 675 MW of newelectric generating capacity beginning April 2000.
PSCo also is seeking 27 MW additional beginning April 2001. Itis almost certain a large portion of that new generation will begas-fired, KN said. In addition, the company is interested inparticipating on the equity side of some of the power plantsinvolved. The power projects may prove to be the certain market KNseeks for its Front Runner project, KN officials suggested.
Parallel to new projects being built for PSCo’s needs, KN -which owns Colorado-based Thermo Co. – may expand that company’sexisting independent power project portfolio. Thermo is competingto provide some of the added power PSCo needs. PSCo asked forproposals by Nov. 30, promising bid evaluation will be done by anindependent evaluator and contracts will be awarded by Jan. 31,1999.
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