Amid a flurry of protests from existing storage customers, FERClast week accepted and suspended Natural Gas Pipeline Co. ofAmerica’s tariff proposal to provide a new storage service forpower generation customers, but it made it subject to refund,conditions and the outcome of a technical conference.

The pipeline’s existing storage customers raised a number ofissues, including degradation of service, rates for the newservice, subsidization, revenue crediting and capacity-releaserestrictions. The Commission, on one hand, commended Natural for a”new and innovative” storage service, saying it would help in themarketing of the pipeline’s unsubscribed firm capacity when the 1.3Bcf/d of deliveries from Alliance Pipeline hit its markets. But, onthe other hand, FERC said it had “many of the same concerns as the[existing customers] and believes that the issues warrant furtherdiscussion” in a technical conference.

The proposed firm reverse storage service (FRSS) would have”some of the fundamental elements” of Natural’s existing DSSstorage service, but the injection and withdrawal seasons would bereversed [RP00-169]. Withdrawals under FRSS would be made in thesummer months, between May 15 and Sept. 30, while injections wouldoccur in the winter, between Dec. 1 and the end of February. Thepipeline said it would be able to offer approximately 20 Bcf ofservice under FRSS.

Existing storage customers wanted to know how Natural suddenlyacquired the ability to offer out-of-season injections andwithdrawals. They contend the Midwest pipeline had always told themthat no such flexibility existed. If the FRSS service is offered topower generators, existing storage customers said they also wantedthe right to perform out-of-season injections/withdrawals.

In addition to the technical conference, the Commission orderedNatural to file a report one year after the FRSS service has beenin operation, “given the possibly significant impact that [it] mayhave on Natural’s existing storage operations and the parties’concerns.”

In the order, the Commission said it was “especially concernedthat, since rate schedule FRSS would have the effect of levelingout the storage injections and withdrawals, [it] could harmNatural’s storage fields (given that Natural claimed in itsrestructuring proceeding that it was necessary to cycle 95% of itsstorage volumes).” It directed Natural to file within 15 days “anyengineering studies or analyses which it or an outside party hasdone since its restructuring” that would dispel these concerns. Thepipeline also must submit information related to the impact on itssystem operations.

Based on “current expressions of interests” in FRSS, theCommission limited Natural’s proposed service to 100,000 Dth/d,subject to further review. This “would protect Natural’s existingfirm services and also protect the storage fields from anysignificant damage, while permitting Natural to initiate theproposed service at the level that it estimated in [its] filing,”the order said.

Susan Parker

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