Full requirements (FR) service for East of California customers, which gives them unlimited access to firm capacity at no additional demand charges, is a “significant contributing factor” to the shortfall of transportation capacity on El Paso Natural Gas, and the practice should be ended, says Southern California Gas (SoCalGas).

“The problem is not solely lack of construction of new capacity [on El Paso] nor should the problem be solved solely by constructing new facilities,” said the California local distribution company (LDC), which called on FERC to convert the existing FR service on the pipeline to contract-demand (CD) service, under which a shipper’s rights to capacity are limited by the terms of its contract.

SoCalGas has aligned itself with a complaint brought in mid-July by a group of producers (CD shippers), who contend that El Paso has been unable to fulfill its firm capacity obligations due to its alleged practice of overselling its mainline capacity and a 50%-plus growth in FR usage since 1995 [RP01-484]. The producers called for FERC to switch all of the FR contracts to CD contracts at CD levels equivalent to a FR customer’s billing determinants on a seasonal basis, or in the alternative until El Paso expands its system to the level needed to serve its current firm demand on a reliable basis. They also asked the Commission to direct El Paso to expand its system to meet its current firm contract demand consistent with its obligations.

SoCalGas, however, said it could not fully support a separate complaint filed by a group of Texas, New Mexico and Arizona shippers (FR customers) against El Paso, primarily because the East of California group believes that throwing new capacity at the problem is the sole solution. The group wants FERC to order El Paso to expand its system by a minimum of 500-700 MMcf/d to meet the “certificated entitlements” of its firm customers.

“SoCalGas understands the frustration of the FR customers and generally supports their complaint. SoCalGas, however, urges the FR shippers, and the Commission, to recognize that FR service [itself] is part of the problem and eliminating FR service is an essential part of any solution,” the LDC told the Commission.

“There is no equitable, rational or justifiable reasons to allow full requirements service to be perpetuated on the El Paso system, especially in light of the significant detriment to other shippers and the diminution in the level and reliability of service to all other customers on the El Paso system as a result of these anomalous full requirements contracts.”

The LDC said it backed part of the FR shippers’ complaint to the extent that it would require El Paso to award capacity on new or expanded lines to existing shippers to meet current CD and converted CD for FR shippers. But this must be combined with the elimination of FR service on El Paso, it stressed. “Absent both steps, certainty and reliability can never be established on the El Paso system.

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