Parties to transportation letter agreements that have raised eyebrows at FERC — Northern Natural Gas pipeline and cogeneration facilities in Minnesota and Wisconsin — said they would not object if the Commission chooses to disclose the documents to the public.

“The terms of the [letter] agreements require the parties to maintain their confidentiality,” said cogenerators LSP-Cottage Grove LP and LSP-Whitewater Ltd. Partnership, which sought confidential treatment of the agreements as part of a complaint brought against Northern Natural. “However, [we] have no objection to public disclosure of these agreements, provided that Northern Natural has no objection,” they told FERC Tuesday [RP03-604].

“Northern has no objection to the release of the letter agreements by the Commission,” the MidAmerican Energy pipeline responded.

The letter agreements are at the center of a complaint filed last September by Cottage Grove and Whitewater, which claimed that Northern Natural had billed them for $1.7 million in unwarranted surcharges between January and March 2003 for transporting gas to the combined-cycle generation facilities in the Midwest. The companies asked FERC to bar Northern Natural from collecting the surcharges (see Daily GPI, Dec. 29).

But the case has evolved into more than just a billing dispute, prompting the agency to question the legality of the agreements negotiated between Northern Natural and the cogeneration companies in 1995.

FERC in late December ordered Northern Natural Gas to show cause that its agreements with Cottage Grove and Whitewater were, in fact, proper. It gave the pipeline 30 days to show cause that a number of provisions in the agreements (i.e. fuel charges, minimum take provisions and discounts) are not unlawful and do not restrict competition.

The agency further said it was inclined not to grant Cottage Grove’s and Whitewater’s plea for confidential treatment of the agreements. “In examining the letter agreements, the Commission has found a number of provisions that appear to deviate in material respects from Northern Natural’s pro forma service agreements” that are on file at the agency, the show-cause order said. In the Dec. 22 order, FERC gave the cogenerators an additional 15 days to make their case for confidential treatment of the agreements.

The Commission noted that it will first have to settle the matter involving the legality of the letter agreements before it can decide the billing dispute. Whether or not the parties resolve the dispute on their own, FERC’s ruling in the case may affect the rates charged under the letter agreements in the future, according to FERC.

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