Transcontinental Gas Pipeline says it’s willing to price itsproposed SouthCoast expansion in Georgia and Alabama at anincremental rate, which should eliminate much of the opposition tothe project.

Last June, existing Transco shippers insisted the SouthCoastexpansion was the pipeline’s latest effort to try to segment itsprojects in order to circumvent the 5% threshold test for rolled-inrate treatment. When viewed by itself, they conceded the rateimpact of the SouthCoast project on existing shippers was below thethreshold. But when considered in the context of other recentTransco expansions – SunBelt, Mobile Bay and Cherokee, to name afew – the shippers argued the rate impact on the existing systemwas considerably greater than the required 5%.

In a Nov. 16 letter to FERC, the pipeline agreed to incrementalpricing for SouthCoast to satisfy the “no subsidy” requirementunder the new policy statement for pipeline construction. Althoughrolling in the costs of SouthCoast would result in a rate hike ofonly “slightly above 2% for rate schedule FT shippers and even lessfor other firm rate schedules,” the SouthCoast project “appears tofail this threshold requirement (apparently regardless of the factthat the system benefits to existing customers would counterbalancethe rate increase),” the pipeline noted.

It contends the SouthCoast project, which would expand itssystem by 204,099 Dth/d, “will enhance Transco’s operationalflexibility to provide service, including no-notice service, andwill increase the ability of existing shippers to market ortransport gas to secondary markets using flexible receipt anddelivery points, capacity release or interruptible transportation.”

Transco estimated the incremental rate for firm service on themainline expansion portion of the SouthCoast project would be7.6214 cents/Dth, and the rate for firm service on the NorthGeorgia extension segment would be 5.4518 cents/Dth. Shippers withcapacity on both parts of the SouthCoast expansion would pay atotal of 13.0732 cents/Dth.

Transco urged the Commission to “expeditiously approve” theSouthCoast expansion so that it can complete construction and be inservice by Nov. 1, 2000, the start of the 2000-01 winter heatingseason.

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