There’s no point in opening the valves on a new pipeline if noone is there to take the gas, Maritimes and Northeast Pipeline toldFERC this week. The pipeline said its only shipper, affiliate DukeEnergy, has backed out of Phase I of its project, deferring itsrequest for 60 MMcf/d of firm transportation until Nov. 1, 1999. Asa result, Maritimes has requested it be allowed to extend itsin-service date by a year and defer cost-recovery while movingforward on construction of most of the system.
The Phase I line is part of a joint pipeline project Maritimesis building with Portland Natural Gas Transmission running fromDracut, MA, to Westbrook, ME, where the line is expected to connectwith its larger Phase II pipeline project in November 1999. PhaseII would bring gas from Sable Island offshore Nova Scotia to theU.S for the first time.
Extending the in-service date would allow Maritimes to continueto accrue allowance for funds used during construction up to dateof actual service. Maritimes also has requested it be allowed todefer recovery of its portion of the operating costs (if any)incurred in connection with the Phase I Joint Facilities for theyear it would be delayed. Maritimes is a partner in the 100-mile,660 MMcf/d Joint Facilitates pipeline with PNGTS, which hascustomers in need of gas service next fall. Under an agreement withPNGTS, Maritimes would begin incurring operating expenses once anyportion of the facilities is in service. Maritimes requests it beallowed to capitalize its share of those operating expenses it willincur prior to Nov. 1, 1999.
In the alternative, Maritimes requests it be allowed to recordthe appropriate cost-of-service each month for the facilities,including a carrying charge on the cumulative balance, in aregulatory asset account and on Nov. 1, 1999, include theregulatory asset as part of its rate base.
“Under normal circumstances, if its shipper had requested todefer the effective date of its firm service agreement, Maritimeswould simply defer construction to coincide with the revisedeffective date. Here the situation is complicated by the timingdifferences between PNGTS and Maritimes,” the pipeline company toldFERC. The Commission is partly to blame for the problem, accordingto Maritimes, because FERC ordered PNGTS and Maritimes to combinetheir competing projects.
The company said, however, it has been evaluating severaloptions that would mitigate the cost of constructing its projectone year earlier than service is required. One option would involvedeferring the construction of the Haverhill-to-Dracut portion ofthe Joint Facilities. “This should result in significant costmitigation while still allowing Maritimes and PNGTS shippers toaccess Tennessee Gas Pipeline.”
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