Reliant Energy Gas Transmission, whose proposal to supplytransportation services to a mega gas-fired generation project wasrejected, 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 Federal Energy Regulatory Commission’s task will be todetermine whether Reliant Energy’s protestations are merely a caseof sour grapes or whether there are genuine demand issuesassociated with the proposed “single-project” pipeline, which wouldprovide gas to what will be the largest combined-cycle gas-firedgeneration plant in the United States.

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 “inferior” proposals of ReliantEnergy. Panda Energy indirectly owns both Trans-Union and UnionPower 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 on Monday. “Sincethere is a great deal of merchant capacity competing to be built inthe same region, it is possible that if actually built, the UPPproject will be significantly scaled back,” resulting in strandedcapacity either on Trans-Union or on existing pipelines.

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 levels have been thesubject of [much] debate”

Given these uncertainties, Reliant Energy urged the Commissionnot to grant Trans-Union a Section 7(c) certificate until it canshow market need for the Arkansas generation capacity. 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.

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