Ohio and Pennsylvania landowners aren’t convinced the precedentagreements submitted by the sponsors of the proposed IndependencePipeline last month provide “sufficient evidence” of marketsupport, and have asked FERC to deny the greenfield pipelineproject a certificate when it takes up the case this week.

The Independence filing may have met the Commission’srequirement for the project to have at least 35% of its totalcapacity subscribed by the deadline of June 26, but it still is”incomplete and inadequate” because it fails to give anyinformation about rates — except to say they would be negotiated— or about the markets to be served, said the Ohio-PennsylvaniaLandowners Association and the Wayne County (OH) LandownersAssociation last week [CP97-315].

On June 26, sponsors announced they filed two binding precedentagreements for 350 MMcf/d on Independence, or 38% of the project’sinitial capacity of 961 MMcf/d. The agreements were with DynegyMarketing and Trade (300 MMcf/d) and Duke Energy Trading andMarketing LLC (50 MMcf/d). Duke Energy backed out of its precedentagreement on Independence last week, but Dynegy quickly picked upthe capacity. FERC has scheduled the Independence project, as wellas its associated SupplyLink expansion, for consideration at itsregular meeting this Wednesday. Both projects have been pending atthe Commission since 1997.

In its June filing, Independence — which is sponsored by ANRPipeline, Transcontinental Gas Pipe Line and National Fuel Gas Co.— “refused to file the negotiated rates on which the precedentagreements are based,” the landowner groups said. But it concededthe “rates to be charged are less than the maximum rates on whichthe economics of the pipeline proposal were first presented,” theynoted. In addition to the lack of information on rates, thelandowners pointed out that the “precedent agreements are withmarketers — with no evidence presented that there are trulyincremental load requirements being met by the proposed project.”

If the Independence project’s “marginal demonstration of marketdemand” (38%) is based on rates that are “significantlydiscounted,” the landowners contend “there is no real evidence ofproject need — and a certificate with the right of eminent domainis not in the public convenience and necessity” under the NaturalGas Act (NGA).

Absent any data on the “level of discounting” under theIndependence precedent agreements, “there is no way to evaluate thereal market need for the project,” the landowners said. “That rateinformation must also be made available to all interested partieswith an opportunity to comment before any action is taken by theCommission.”

The landowners urged FERC to also look behind the precedentagreements to determine if they really demonstrate project need.Independence “has provided no evidence who will use the capacity orwhether the gas supply to be transported is available,” they noted,adding that the agreements have termination clauses as well.

The 400-mile Independence pipeline, plus SupplyLink (an upstreamexpansion of ANR’s existing system), would transport Canadian gassupplies from the Midwest to growing markets on the East Coast andin the Northeast. The proposed line would run through a number ofstates, including Ohio and Pennsylvania.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.