FERC last week changed its tune and cleared the way for NorthernNatural Gas to acquire off-system, interruptible capacity fromthird-party pipelines. On rehearing of a July order, the Commissionfound that since Northern Natural sought the IT capacity to augmentits own operations, rather than for the purpose of re-marketing it,its request did not raise the concerns cited in a 1997 TexasEastern Transmission (Tetco) case.
In the Tetco proceeding, FERC feared that third-party purchasescould lead to preferential treatment for purchasing pipelines andcould limit the capacity choices of other customers on third-partysystems. As such, it required pipelines to seek advance approvalfrom the Commission to acquire off-system capacity. But the issuesraised in Tetco were “inapplicable” in the Northern Natural case,the FERC order said [RP98-341-001].
“The factor that distinguishes Northern’s proposal here fromthat in Texas Eastern is that the off-system capacity to beobtained by Texas Eastern could have been re-marketed to othershippers, while in Northern’s proposal the off-system capacity willnot be re-marketed and is only for operational use.”
The Commission’s decision in Tetco was remanded by the D.C.Circuit Court of Appeals this year. The court said FERC had notadequately explained why interstate pipelines had to seek priorCommission approval to acquire off-system capacity while otherparties didn’t.
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