Faced with the “deterioration of [the] financial soundness” of certain natural gas shippers on its system, Questar Pipeline Co. is proposing tariff changes that would protect itself financially in the event firm capacity is released by non-creditworthy or insolvent shippers.

The Salt Lake City, UT-based pipeline called on the Federal Energy Regulatory Commission to approve the changes to its tariff “immediately,” saying it cannot hold off until the North American Energy Standards Board (NAESB) addresses the pipeline’s concerns as part of its ongoing effort to develop creditworthiness standards.

“Since a shipper can release firm capacity at a reduced price to a replacement shipper, Questar may be at risk for the difference between the contract price with the releasing shipper and the potentially reduced price associated with the release,” the pipeline told FERC [RP03-250].

Questar said it wants to be able to terminate a replacement shipper’s service agreement upon 30 days’ written notice if the releasing shipper has failed to maintain the creditworthiness standards in the pipeline’s tariff, and the rate in the replacement shipper’s service agreement is less than the releasing shipper’s contract rate, or the replacement shipper cannot demonstrate sufficient creditworthiness to qualify on its own for continued transportation service.

According to Questar’s proposal, the replacement shipper could continue its capacity release if, prior to the end of the 30-day notice period, it can satisfactorily show its creditworthiness, and it agrees to pay the lower of 1) the former releasing shipper’s contract rate, or 2) the maximum reservation and commodity rates for service on Questar’s system. The replacement shipper would be required to make the payment on the first day following the end of the 30-day notice period, the pipeline said.

Questar requested that its proposed tariff changes go into effect March 8 of this year.

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