Indications of the shortage of pipeline capacity to Californiashowed up again last week in a protest filed by producers againstdeals made by Transwestern Pipeline with two shippers for gastransportation in February. The producers claim others did not havea meaningful opportunity to bid on capacity and that it was soldoutside the tariff rate structure.

The producers, characterized as Indicated Shippers, called onthe Federal Energy Regulatory Commission to force disclosure of theterms and conditions of negotiated rate contracts betweenTranswestern and Sempra Energy Trading and Richardson Products Co.The Shippers said it appeared Transwestern had (1) failed to offertransportation service under recourse rates for a meaningful periodof time prior to executing negotiated rate contracts; (2)negotiated terms and conditions of service not permitted underOrder 637; and (3) had failed to comply with disclosurerequirements under the negotiated rates policy.

The shippers, including BP Amoco, Burlington Resources, Conoco,Exxon Mobil, Marathon, and Texaco, said they were concerned thatTranswestern had exercised market power “in the context ofunprecedented demand in the California market and capacityconstraints on interstate pipelines serving the California market.”FERC staff also has questioned the transactions, requesting furtherinformation and asking why Sempra and Richardson would pay anegotiated rate or more than the maximum recourse rate in thetariff.

It also is not clear how and when Transwestern posted theavailable space, they said. The Shippers complained thatTranswestern’s capacity posting procedures are inadequate.

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