Natural gas producers and marketers called on FERC to reject a tariff proposal that they claim would allow Kern River Gas Transmission Co. to set a minimum term on available transportation capacity posted for bid when the pipeline wishes to reserve capacity for a future expansion project.

“Kern River should not be permitted to puts its expansion interests ahead of the interests of its existing shippers,” said BP America Production, BP Energy Co., Chevron U.S.A. Inc., Nevada Cogeneration Associates, Aera Energy LLC and Coral Energy Resources LP in a protest filed at the Commission [RP01-411-001]. All are firm customers of Kern River.

Specifically, the tariff proposal would allow Kern River to “establish a minimum acceptable term for available capacity that would be comparable to the minimum term that would be required of shippers that would participate in [an] expansion project,” they said. Kern River could set a minimum term for available capacity even before it has commitments from expansion shippers to contract for that minimum term, according to their protest.

This violates FERC precedent and policy because “it would prevent shippers, willing to pay the maximum rate for available capacity, from obtaining their capacity unless they agreed to Kern River’s minimum term,” the producers and marketers noted.

Moreover, it would impose an “unfair requirement on shippers to subscribe to capacity for longer terms than the shipper might actually need in order to acquire or retain available capacity,” they argued. “This proposal would also remove available primary firm capacity from the market unless a shipper agreed to bid a minimum term, set by Kern River, at Kern River’s sole discretion.”

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