Southwest Gas Corp.’s plea to further push back the date for the conversion of full-requirements (FR) service on El Paso Natural Gas to contract-demand (CD) service is merely a foot-dragging maneuver on the part of the local distribution company (LDC), and should be rejected by FERC outright, said a group of major natural gas producers and marketers served by the pipeline.

Southwest sought the delay at the Commission in December, claiming that El Paso had allocated it only 713,338 Mcf/d of firm transportation capacity for the month of January when its actual requirements were 786,910 Mcf/d. It asked FERC to postpone the scheduled conversion to system-wide CD service until “ample, reliable primary firm capacity is available to full requirements customers” on El Paso.

The Las Vegas, NV-based LDC is a major opponent of FERC’s plan to switch all of El Paso’s current FR shippers to CD service by May 2003. The conversion initially was to have occurred in November, but the El Paso Corp. pipeline and FR shippers had failed to reach an agreement on how to allocate the pipeline’s west-flow capacity for deliveries to Southwest markets in Texas, Arizona and New Mexico. Southwest is the largest FR shipper on El Paso.

Another “delay would perpetuate the inequitable effect that Southwest and other full requirements shippers would be permitted to continue receiving significant amounts of firm capacity for which they do not pay reservation charges, while contract demand shippers continue to pay for firm capacity that they do not receive,” said the group of producers and marketers [RP00-336-005].

The group included Aera Energy LLC, BP America Production Co., Burlington Resources Trading Inc., ConocoPhillips Co., Coral Energy Resources LP, Occidental Energy Marketing Inc. and Texaco Natural Gas Inc. All are CD shippers on the El Paso system, mostly serving the California gas market..

In addition, they said deferring the conversion “would perpetuate unreliable transportation service on El Paso,” and would have a “chilling effect on decisions to build new [El Paso] infrastructure.”

Southwest’s claim that its January capacity requirements are 786,918 Mcf/d is “unsubstantiated and inconsistent,” the producers and marketers noted. But even if there is some truth to this, Southwest has only itself to blame for not having enough capacity, they said.

The LDC, as did many other FR shippers, passed up two opportunities — one in August and another in October — to acquire turned-back capacity during open seasons by El Paso. El Paso offered 521,636 Mcf/d of turned-back capacity to FR customers in October, and 725,000 Mcf/d in mid-August, but FR shippers thumbed their noses both times.

“Southwest did not submit a bid to acquire any of this capacity, which would have solved [its] concerns about the availability of reliable primary firm transportation for its peak January needs in Arizona,” the producers and marketers noted. “Therefore, there is no legitimate basis for any further delay in this proceeding” at the Commission.

“The bottom line is that Southwest simply does not wish to pay for any additional capacity, assuming [for the sake of argument] that it is even required.”

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