Kinder Morgan Interstate Gas Transmission (KMI) has attempted anend run around FERC’s Order 637, filing wide-ranging operationaland rate changes early under expedited tariff procedures to avoidthe more rigorous review in store for compliance filings, accordingto customer protests.

Items in KMI’s tariff filing fall into no less than 13 generalcategories, Indicated Shippers said. They include imbalanceprovisions, storage balances, small customer service, gas quality,point allocations, curtailment priorities, right of first refusal,scheduling priorities, incidental purchase and sale, capacityrelease, unauthorized gas, capacity rights overrun charge, andmiscellaneous.

Indicated Shippers called for summary rejection or maximumsuspension of KMI’s June 5 tariff filing (RP00-316), saying “mostof the changes proposed in this case represent an effort by KMI toimplement elements of Order 637 selectively and in a mannerdesigned to minimize the opportunity for meaningful review andcomment by KMI’s customers.” Only 12 days are allowed forintervention and comment on usually routine tariff filings, whilethe Federal Energy Regulatory Commission has allotted 30 days forcomments on Order 637 compliance filings. KMI was among the groupof pipelines slated to make compliance filings June 15.

KMI said its filing did not constitute its compliance filing,but was aimed at changing its tariff to reflect “the currentnatural gas business climate and evolving business practices..” Itdid acknowledge, “A number of the changes proposed herein areconsistent with and advance the Commission’s goals in Order No.637.”

Indicated Shippers also protested changes that would makedecisions regarding negative storage imbalances and end of seasoninventory swaps a matter of KMI’s discretion without any standardson how those decisions would be made. The shippers also protestedchanges to the default methodology for point allocations forbilling purposes, and the injection of KMI discretion into theformula for accepting or rejecting predetermined allocationagreements with upstream or downstream parties. In additioncurtailment provisions filed by KMI appear to be contrary to Order637-A’s mandate that shippers moving gas within the primary pathshould have primary rights.

The filing also would give the pipeline the opportunity tobottle up significant quantities of coal bed methane gas inWyoming’s Powder River Basin by imposing more rigorous standards onnitrogen content, according to Western Gas Resources. A key changewould impose a nitrogen gas quality specification of 3% by volume.While KMI states the change is necessary to accommodate transferswith interconnecting pipelines, six of the seven connectingpipelines identified have no nitrogen specifications. Only KMI’saffiliate, Natural Gas Pipeline Co. of America, has similar rules,Western Gas said.

“KMI’s proposed nitrogen specification would enable KMI torefuse to accept coal bed methane production for transportation,thereby foreclosing the availability of one of the principal meansof downstream pipeline egress out of Powder River productionareas,” Western Gas added. Producers would have to shut inproduction while they construct costly nitrogen facilities. Thiscould “create at least a temporary gap in the downstream movementof coal bed supplies to mid-continent and eastern markets, thusfrustrating consumer access to these significant supplies.”

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