Reliant Energy Gas Transmission, whose proposal to supplytransportation services to a mega gas-fired generation project wasspurned, is now rapping that very same power project, insistingthat there’s not enough demand to justify the project or thepipeline option that was selected to supply it with natural gas.

The Commission’s task will be to determine whether ReliantEnergy’s protestations are merely a case of sour grapes or whetherthere are genuine demand issues associated with the proposed”single-project” pipeline, which would provide gas to what will bethe largest combined-cycle gas-fired generation plant in the UnitedStates. It may very well be the latter, given that other companies,with no axes to grind, also have filed protests.

At issue is a proposal by Trans-Union Interstate Pipeline build a 42-mile, 30-inch high-pressure pipeline to supply atleast 430,000 Dth/d of gas to one customer – a planned 2,700 MWgas-fired facility in southern Arkansas. In North CentralLouisiana, the proposed interstate pipeline would tie into theSharon interconnection with Texas Gas Transmission Corp. and GulfStates Pipeline’s intrastate system, which plans to expand itsfacilities to accommodate the power project.

Dallas-based Panda Energy International, a developer of merchantpower plants, created Trans-Union to build the “single-project”pipeline after it rejected the so-called “inferior” proposals ofReliant Energy. Panda Energy indirectly owns both Trans-Union andUnion Power Partners (UPP), which will build and operate the powerfacility that’s targeted for in-service in the spring of 2002.

“…[B]eyond an unexplained reference to ‘peak periodbrown-outs” in the region, Trans-Union has offered no evidence ofactual market demand to support the sizing of the [Arkansas] plantand, in turn, the sizing of its proposed pipeline,” a disenchantedReliant Energy told the Commission in a protest last Monday[CP00-47]. “Since there is a great deal of merchant capacitycompeting to be built in the same region, it is possible that ifactually built, the UPP project will be significantly scaled back,”resulting in stranded capacity either on Trans-Union or on existingpipelines.

In addition to market need, Reliant Energy questioned whetherUPP would be able to secure enough capacity on the Entergy systemto transmit an “unprecedented” 2,700 MW. As FERC “is well aware,Entergy’s available transmission capacity (ATC) levels have beenthe subject of [much] debate at the Commission.”

Reliant Energy urged the Commission not to grant Trans-Union aSection 7(c) certificate until it can show market need. It askedFERC to convene a technical conference to investigate the issuesand to determine whether a hearing is necessary.

Moreover, Reliant Energy raised questions with respect to GulfStates’ part in the Trans-Union project. Gulf States proposes tobuild 30 miles of 20-inch pipeline from its existing system at BearCreek Storage in Louisiana to Trans-Union at the Sharoninterconnect. Reliant Energy contends Gulf States, an intrastatesystem, may be required to file a separate Section 7 application tocarry out its expansion.

“Just because Gulf States is an intrastate pipeline, it is notexempt in all cases from the reach of the Natural Gas Act,”according to Reliant Energy’s protest. If FERC determines that aSection 7 application is warranted from Gulf States, then theTrans-Union application “should be held in abeyance or dismisseduntil that application is filed.”

Lion Oil Co., which owns a refinery in Arkansas, filed a limitedprotest, objecting not to the pipeline per se, but to ratherTrans-Union’s plan to use the line as a “sole-use” pipeline. Itcalled on FERC to approve the pipeline but only on the conditionthat Trans-Union holds an open season to allow other shippers toobtain the benefits of the facility.

Currently only one pipeline — Reliant Gas Transmission —serves the El Dorado, AR, region, where Lion’s refinery is locatedand UPP’s proposed power project will be sited. “The closestinterstate pipeline to El Dorado (other than Reliant) isapproximately 30 miles away. Trans-Union thus offers the firstcompetitive alternative to natural gas users in El Dorado,” LionOil told the Commission. Lion Oil, a Reliant customer, said itwants to take service on Trans-Union’s pipeline.

Susan Parker

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