Major producers and utilities registered strong protests toTrunkline Gas Co.’s proposal to spin down a 720-mile portion of its26-inch diameter mainline, saying that while this action may be inthe pipeline’s best interest it’s not “in the public interest.”

“The basis for Trunkline’s application is that there is anexcess amount of pipeline capacity serving [its] market areas, andthat this excess capacity has forced Trunkline to heavily discountits transportation services,” said Indicated Shippers, whichinclude six producers. Trunkline further projects that thesituation will worsen in the years ahead.

The “applicable standard” for whether FERC should approveTrunkline’s proposed abandonment is not whether it’s “potentiallyprofitable” for Trunkline and its affiliate, CMS Trunkline PipelineHoldings Inc., but rather whether it’s in the public interest, theproducers said. “A transfer at less than market value is not in thepublic interest, particularly given the detriments of abandonmentto shippers.”

Northern Indiana Public Service Co. and Northern Indiana Fueland Light Co. agreed, saying Trunkline’s proposal was inconsistentwith the “public convenience and necessity” standard under Section7 of the Natural Gas Act.

Trunkline proposes to spin down the Louisiana-to-Illinois lineto another Duke Energy subsidiary, CMS Trunkline Pipeline Holdings,that plans to make better use of the space by converting it totransport ethane and other hydrocarbon vapors to the Gulf Coastfrom the Aux Sable Liquid Products processing plant, which is beingbuilt at the terminus of Alliance Pipeline.

Trunkline seeks to transfer the 26-inch line to CMS Holdings atthe net book value, which it estimated at about $10.2 million. Anew venture company, which would include CMS Holdings and otherentities, would reimburse Trunkline for the costs associated withthe abandonment of the line, as well as the costs for re-connectingexisting customers to the mainline. The transfer of the line wouldreduce the mainline market capacity of Trunkline’s system by 255MDth/d, or by 14%, to 1.555 MDth/d. It would slice Trunkline’s costof service by about $3.3 million.

“This means that under the proposed abandonment, ratepayerswould be trading a 3.2% reduction in cost responsibility in returnfor a 14% reduction in pipeline capacity. This arrangement wouldnot serve to alleviate the burden on shippers attributable todeeply discounted or unused capacity. Instead, abandonment wouldonly increase the burden,” Indicated Shippers told FERC [CP00-114].

“…[T]he fact that Trunkline is not able to extract its fulltariff rates from shippers is not justification for the pipeline toabandon the capacity — capacity that has essentially been paidfor by Trunkline’s shippers — simply in order for Trunkline’saffiliate to benefit economically from a new venture,” producersnoted.

Since the 1950s, when the Trunkline line was placed intoservice, the pipeline has recovered from jurisdictional customers”both return on and return of (except for the small remainingunder-depreciated plant of $10.2 million) its investment.” AllowingTrunkline to remove the line at this juncture not only would beunfair, but it would add to the rate burden of the remainingshippers on the pipeline’s system, they insisted.

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