Bowing to the concerns of shippers, FERC last week suspended forthe maximum five-month term Texas Gas Transmission’s tariffproposal to provide new hourly service for the summer electricpower generation market. During the suspension period, theCommission directed staff to convene a technical conference toaddress shippers’ issues and report back to it within 120 days.

Customers of the pipeline are primarily concerned the proposedservice — a summer no-notice service (SNS) — will “degrade” or”dilute” firm transportation to existing shippers. They also fearexisting shippers will wind up subsidizing underrecoveriesassociated with providing the new service to electric generatorsduring the summer months. Moreover, existing shippers, most of whompay a two-part rate for services, contend the one-part volumetricrate that Texas Gas is proposing for the SNS is discriminatory.

Texas Gas requested a waiver of Commission regulations in orderto charge the one-part rate. But FERC said it would withhold itsdecision until the pipeline submitted certain information and thetechnical conference was completed. However, FERC rejected outrightthe pipeline’s other request for a waiver of regulations thatrequire it to submit work papers showing the estimated revenue andcosts of providing SNS over a 12-month period.

The Commission also directed Texas Gas to respond within 20 daysto all the “informational questions” posed by Public ServiceElectric and Gas. PSE&G raised “numerous questions regardingthe operational nature of the proposed SNS service, as well as ratequestions…..,” according to the order [RP00-83]. Moreover, thecompany is concerned SNS may be able to compete unfairly againstcapacity release on the Texas Gas system.

Although designed primarily to meet the unique requirements ofthe summer generation market, Texas Gas says existing customersalso would be eligible to receive the proposed service. Thepipeline requested that SNS become effective Jan. 14, but FERCpushed back the date to June 14 — after the technical conference.

SNS would be a firm service offered under Part 284 of FERC’sregulations, which would allow customers to nominate quantities forfirm transportation through Texas Gas’ available pipeline capacitysimilar to Texas Gas’ firm transportation (FT) service. Theproposed service, however, would combine that FT capacity withtemporarily available summer off-peak storage capacity to handleswings in deliveries as an unnominated, no-notice service and toprovide for variable hourly flow at the customer’s primary deliverypoint, according to Texas Gas’ proposal. The no-notice featureswould only be available on a firm basis in the summer season (Aprilthrough October).

Texas Gas contends SNS will not have any adverse impact onexisting services given that it will be provided from available,unsubscribed capacity, combined with temporarily available storagecapacity. Moreover, it said that while SNS would be available fromApril through October, it would be limited to 15 days of service inthe shoulder months of April and October. The pipeline said thiswould be necessary to prevent any interference with or degradationof service to its existing NNS and SGT no-notice customers.

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