The troubled TriState Pipeline got some much-needed good newsyesterday when FERC issued a preliminary determination on thenon-environmental aspects of the project.

The Commission’s approval came about a week after WestcoastEnergy, an investor, pulled out of the TriState venture, leavingCMS Gas Transmission and Storage Co. as the sole owner of theproposed Chicago-to-Canada pipeline.

FERC had put the project on hold last May because of problemsinvolving dual federal-state jurisdiction. The jurisdiction issuewas raised when the sponsors proposed, as part of TriState, loopingthe existing facilities of CMS affiliate Consumers Energy inMichigan, and leasing the capacity back for use in the project. Thesponsors proposed that the expanded capacity would be jointlyregulated by the state and FERC, thus enabling Consumers tomaintain its status as a Hinshaw pipeline. But the Commissionrejected the idea.

The jurisdictional dispute has been resolved. “Upon furtherconsideration,” the Commission no longer believes the TriStateproposal would pose conflicts between federal and state regulation,given that both CMS and Consumers have agreed to “submit to federalregulation (although federal regulation of Consumers will be of’limited jurisdiction’), and the Michigan PSC has pledged itscooperation in resolving any conflicts that should arise.”Consumers still will be able to maintain its status as a Hinshawline under this scenario.

“In sum, based on the willingness of the parties to thetransaction to accept appropriate federal regulation and theassurances of cooperation from the Michigan PSC, we believe theproject can proceed without the potential for regulatory conflict,”the FERC order said [CP99-61].

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