Northern Natural Gas last week disputed allegations that it restricted access to receipt point capacity at a proposed interconnection between the Rockies Express Pipeline (REX) and Northern Natural systems to shippers who agreed to buy a “phantom backhaul service.”
The complaint filed with the Federal Energy Regulatory Commission (FERC) against Northern Natural “is baseless and merely reflects two shippers trying to obtain a result through regulatory maneuvering that they could not obtain in the competitive market,” said the MidAmerican Energy pipeline in responding to the complaint filed last month by two REX shippers, Ultra Resources Inc. and Sempra Rockies LLC (see NGI, Oct. 29).
Northern Natural pointed out that Ultra Resources and Sempra Rockies are only two out of approximately 10 shippers on that area of the REX pipeline, indicating that the majority of REX shippers were satisfied with an open season held earlier this year for 200,000 Dth/d of service from a new REX receipt point to Northern Natural’s Demarc area. The pipeline said it received bids for 630,000 Dth/d, far beyond the available capacity. As a result, it noted that it allocated the 200,000 Dth/d of capacity on a pro rata basis to the seven maximum rate bids.
“Now three months after the close of the open season, Ultra/Sempra ask the Commission to overturn the results of a valid open season they did not participate in. The market has moved forward following the valid open season and the successful bidders have lined up their business, but Ultra/Sempra have decided to file a complaint and ask the Commission to give them a ‘do-over.'”
As for the claims that Northern tied receipt point capacity to a backhaul service, Northern called them “groundless and unsupportable.” Northern said it “did not require use of any new service in order to purchase the available capacity. Northern merely followed its tariff in holding an open season for the newly available capacity from a receipt point to the only primary delivery point with enough capacity available.”
Prior to the open season, Northern Natural said it made parties aware that its system was constrained through the DeMarc North region (i.e., receipts at REX could not go north into the market area). As a result, incremental transportation service from the REX receipt point was available only to upstream (i.e., south of the REX receipt point) delivery points.
The interconnect between REX and Northern Natural in Gage County, NE, will be a “substantial receipt point” on the Northern system, Ultra Resources and Sempra Rockies said in their complaint [RP08-29].
The two REX shippers called on FERC to find Northern Natural’s alleged failure to post REX receipt point capacity on its electronic bulletin board and the alleged tying of the availability of point capacity at the REX receipt point to phantom backhaul service to be “unjust, unreasonable and unlawful.”
They further asked that Northern Natural’s recent open season be “voided and set aside, and that Northern be directed to conduct another open season for primary point capacity at the REX receipt point without tying such point capacity to a requirement that the shipper subscribe to backhaul transportation service from the REX receipt point to Demarc.”
In addition, the shippers urged FERC to declare Northern Natural’s proposed charge for the backhaul service to be “unjust and unreasonable.”
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