Documents furnished by PG&E Gas Transmission-Northwest Corp. (PG&E-GTN) to FERC fail to “conclusively establish” that the pipeline can demand one year of reservation charges as collateral from non-creditworthy shippers to guarantee continued transportation service, according to Denver, CO-based e prime Inc., a subsidiary of Xcel Energy.

The documents, which PG&E-GTN submitted on Jan. 29, “show that [PG&E-GTN] does not have any loan agreements or other lender approvals in effect that contain any specific pre-payment requirement for any…shipper, much less a 12-month requirement,” e prime said in a protest filed Tuesday.

The pipeline claims a 1993 loan agreement from its lenders explicitly requires non-creditworthy shippers on its system to post collateral for one year’s worth of demand charges to continue service. The Commission, in a Jan. 24 order, deferred ruling on whether PG&E-GTN could make this collateral demand until it reviewed the loan agreement (see Daily GPI, Jan. 28). It ordered the pipeline to submit the documents within five days.

“The 1993 loan agreement, which is [PG&E-GTN’s] sole documentary evidence for the 12-month pre-payment requirement, has not been in effect since 1995,” e prime told FERC. However, the pipeline argues the “1993 loan agreement was in effect when the current [creditworthiness] tariff language was accepted” by the Commission, and that this “somehow locked in the 12-month pre-payment requirement,” the marketer said.

“This claim is completely hollow,” e prime contends, noting that the 12-month security requirement was removed when PG&E-GTN’s 1993 loan was refinanced in 1995. “The record is clear that it has been more than seven years since [PG&E-GTN] could reasonably claim that it had the authority to demand a 12-month pre-payment” from non-creditworthy shippers.

The marketer brought a complaint against PG&E-GTN last October, accusing the pipeline of violating the creditworthiness criteria in its own tariff and Commission regulations by demanding that e prime pre-pay $1.5 million in reservation charges for a one-year period, or face suspension of service (see Daily GPI, Oct. 29, 2002). The company asked FERC to order the pipeline to return all but three months of reservation charges, plus interest.

Although FERC deferred ruling on the pre-payment issue in the Jan. 24 order, it did say PG&E-GTN was correct last fall when it determined that e prime was no longer creditworthy under the pipeline’s tariff guidelines, and threatened to suspend service to the company.

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