Natural Gas Pipeline Company of America’s (NGPL) proposal tospecify certain types of discounts in its tariff and avoid seekingFERC approval for each transaction won a partial victory last week.But nearly similar proposals of three El Paso Energy pipelines wererejected, and the trio was told to try again.

In its July 1 filing, Natural proposed a number of tariffchanges to its pro forma service agreements that would enable it totailor discount rates to specific market and business conditions.By using a cookie-cutter approach, the pipeline had sought toescape filing for each individual discount deal that deviated fromits pro forma contracts.

The Commission last week approved several of Natural’svolume-related discount provisions but excluded the provisionsconcerning capacity segmentation and rate components [RP98-310]. Asa result of last week’s order, NGPL contracts that discountspecific volumes in conformance with the examples listed in thepipeline’s pro forma service agreements will no longer have to besubmitted to FERC as non-conforming agreements.

In separate orders, FERC found that the types of discountslisted in the proposed amended rate schedules of Tennessee GasPipeline (RP98-332), Midwestern Gas Transmission (RP98-327) andEast Tennessee Natural Gas (RP98-333) were “overly broad andill-defined” to the point that “almost any discount arrangemententered into could fall within this list.” The biggest problem, itsaid, was that the pipelines’ proposals encompassed “several typesof discounts.”

FERC, however, left open the door for the three El Paso-ownedpipes to re-file their proposals to “specifically define each typeof discount proposed….For example, [a] pipeline could list in itstariff specific types of volume-related discounts it may grant suchas 1) a specified discounted rate will apply only if specifiedvolumes are achieved, and 2) a specified discounted rate will applyin a specified relationship to the volumes actually transported.”

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