Peoples Energy Chairman Richard E. Terry indicated last week hiscompany was talking with potential partners about building analternative pipeline project that would extend from the Chicago hubto serve the southern Wisconsin market.

“Basically at this point we’re talking with Northern Border[Pipeline] and others,” he told NGI, adding that “we really haven’tidentified publicly the other partners.” He provided scantspecifics about the project, explaining that it was still in the”planning stage.” A spokeswoman for Northern Border, an Enronpipeline, confirmed it has discussed a possible project withPeoples Energy, but added it wasn’t clearly “identified” at thispoint.

Such a project, if realized, would be a “modification andalternative” to the 650 MMcf/d Illinois-Wisconsin Express Project,which has been placed on temporary hold, Terry said. While the fateof the project hangs in the balance, the sponsors of the ExpressProject – Peoples Energy, Northern Border, El Paso and Enron – areallowed to pursue other opportunities in the Wisconsin market ontheir own. And that is what Peoples Energy and Northern Borderappear to be doing with this latest project. El Paso said it wasnot involved.

The Express Project, if it gets moving again, proposes toprovide takeaway capacity from the Chicago hub to a point west ofMilwaukee, WI. With the alternative project, “we would be basicallybuilding a pipe probably off the Northern Border system” to atermination point still yet “undefined” in southern Wisconsin.”That’s what we’re reconsidering. Where we want to terminate woulddepend on who all would be customers etc.”

Peoples Energy’s alternative project would be the third attempt- behind the failed 1 Bcf/d Voyageur Pipeline project and theon-hold Express Project – by a company or coalition of companies tobuild a pipeline from northern Illinois to southern Wisconsin tocompete with the existing ANR Pipeline, which has a lock ontransportation along that route. Reportedly neither Voyageur northe Express Project were attractive enough options to entice LDCcustomers to commit to long-term capacity contracts.

Separately, Terry said FERC at its scheduled conference onretail unbundling in February should send a strong message thatunbundling is a state matter. “…I think it’s really a stateissue, and it has to be decided state by state. Different statesare in different circumstances. The LDCs are in different positionsin different states…So for the FERC to try to do something [in a]cookie-cutter approach across the country, I think, is wrong,” hesaid at a luncheon sponsored by the American Gas Association inWashington D.C. Terry will be AGA’s chairman in 1999.

He also thinks that the Commission’s mega-notice of proposedrulemaking, which calls for the auctioning of short-term capacity,could be a roadblock to unbundling. “It could be a problem in somestates,” Terry told reporters. “I don’t see it as a benefit…in acompany like ourselves where we can basically go out and negotiateour own deals.”

Susan Parker

©Copyright 1998 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.