The U.S. portion of TriState Pipeline got some much-needed goodnews last week when FERC issued a preliminary determination on thenon-environmental aspects of the project after resolving a stickyjurisdictional issue. But whether it will be enough to kick-startthe troubled project, which is lagging far behind the competingVector Pipeline, seemed doubtful.

The Commission’s approval came about a week after WestcoastEnergy, which held a 33% interest in TriState, pulled out of theventure, leaving CMS Gas Transmission and Storage Co. as the soleowner and investor in the proposed Chicago-to-Canada pipeline. Asan added slap in the face Westcoast purchased a 30% stake inVector, which is far ahead of TriState in the race to serve marketsin Illinois, Michigan and Ontario.

FERC had put the $361 million TriState project on hold last Maybecause of problems involving dual federal-state jurisdiction overthe part of the line which would loop the existing facilities ofCMS affiliate Consumers Energy in Michigan. TriState proposed thatthe dual ownership of the facilities could be jointly regulated bythe state and FERC, enabling Consumers to maintain its status as aHinshaw pipeline. But the Commission initially balked at the idea,basing its decision on FERC’s rejection of a similar project in1990.

On rehearing [CP99-61] FERC changed its tune and conceded thatTriState was “materially different” from the 1990 project. TheCommission no longer believes the TriState proposal would poseconflicts between federal and state regulation, given that both CMSand Consumers have agreed to “submit to federal regulation(although federal regulation of Consumers will be of ‘limitedjurisdiction’), and the Michigan PSC has pledged its cooperation inresolving any conflicts that should arise,” last week’s order said.Consumers still will be able to maintain its status as a Hinshawline.

Although TriState’s jurisdictional woes are settled, itsproblems are far from over, Union Gas Ltd. – an affiliate ofWestcoast – has pulled out as a shipper on the U.S. portion of theproposed pipeline, reducing the project’s capacity commitments to355 MDth/d – which is 55% of the initial design capacity of 650Dth/d. Union had contracted for 80,000 MDth/d of service. Union’sexodus also leaves TriState solely responsible for construction ofthe Canadian portion of the line.

Susan Parker

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