A proposal by Southern Natural Gas Co. to revise tariff provisions that would, among other things, award transportation requests for 90 days or less without holding an open season, is being protested by Indicated Shippers, which argues that the proposal is “contrary to the scheduling equality goals of (FERC) Order No. 637,” and would grant the company “too much discretion to decide when to hold an open season” for shorter terms.

In its filing, Southern Gas proposed tariff revisions that would (1) allow a shipper with a pre-arranged deal a one-time right to match any bid made in an open season with a higher NPV; and (2) award requests for 90 days or less without holding an open season.

Southern Gas also proposes to add tariff language to (1) ensure that a party cannot roll over its contract awarded under the short-term procedures without an open season; and (2) provide that Southern will post all of these awards on its bulletin board, Indicated Shippers said in its filing.

Indicated Shippers filed its protest with the Federal Energy Regulatory Commission last week [No. RP02-209-000] following Southern Gas’ request to FERC on March 26.

The Indicated Shippers noted the proposal “is contrary to the Commission’s stated goals in Order 637.” If Southern Gas were permitted the proposed revision, the company would have “an unfair competitive marketing advantage over the releasing shippers on its system.” Indicated Shippers said that under the proposal, a shipper or purchaser “seeking capacity for a term longer than 31 days, but less than 91 days would be more likely to seek to obtain that capacity from the pipeline because the shipper/purchaser would not have to compete for that capacity in an open season.”

Allowing different standards for capacity release conflicts with FERC’s “stated goals of placing capacity release transactions on an equal footing with pipeline services, and assuring that capacity is allocated on a nondiscriminatory basis,” wrote Indicated Shippers. The “only way to ensure that capacity is allocated to the highest bidder is for the pipeline to hold an open season.” A capacity award for more than 31 days “should only be done in the context of an open season. To do otherwise would counteract the Commission’s goal…of awarding capacity to the highest bidder.”

Indicated Shippers also protested the language in Southern Gas’ proposal “because it grants Southern too much discretion to decide when it will hold an open season to award capacity for terms of 90 days or less,” and does not contain language limiting when Southern Gas would hold the open seasons.

Although FERC has “permitted discretion” to other pipelines, Indicated Shippers said the Commission had not permitted “this same unfettered discretion for a pipeline to determine whether or not to hold an open season for awards of capacity for 90 days or less.” It said that the proposal would give Southern Gas “more discretion than other pipelines and has no basis” under FERC precedent. “Notably, Southern’s proposal is inconsistent with that of its affiliated pipeline El Paso Natural Gas Co., which requires an open season to be held for sales of capacity for greater than 31 days.”

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