NGI The Weekly Gas Market Report
Northern Natural Gas has had three or more chances to justifyits proposal to offer limited firm throughput (LFT) service on itssystem, but it has struck out every time, industrial anddistributor shippers contend. They have asked FERC to either castaside the pipeline’s proposal for the new service or order radicalchanges to assuage their concerns.
Their chief concern is that Northern Natural Gas, an affiliateof Enron, simply hasn’t proven that it has sufficient unsubscribedfirm transportation capacity in its market area to accommodate theproposed LFT service, without infringing on the capacity rights ofits existing firm shippers. Given this dearth of firm capacity, adecision to allow the LFT service “could result in curtailments andthe serious degradation of service to firm shippers” on NorthernNatural’s system, Nicor Gas charged.
Northern Natural shippers are worried that the pipeline will”double sell” already-subscribed firm capacity to provide the newLFT service, although Northern Natural assured them at a Julytechnical conference and in supplemental data filed earlier thismonth that this would never happen. They want the pipeline to putthis in writing.
But Northern Natural “adamantly refuses to incorporate thisassurance into its tariff language by making LFT a secondary firmservice, with priority over interruptible service but subordinateto existing [firm] service,” said Reliant Energy Minnegasco[RP00-223].
Under its proposal, Northern Natural said the LFT service wouldbe designed for those shippers that prefer firm service but areable to accommodate periodic service interruptions. The LFT firmservice would not be available for up to 10 days each month(Limited Days). FERC accepted the proposal in an order late April,subject to the maximum five-month suspension and refund, butdirected Northern Natural to address protesters’ concerns andfurther justify its proposed rate for the LFT service.
Shippers — especially industrials — insist Northern Naturalhas fallen short of the Commission’s directive. The pipeline’s LFTproposal “continues to raise significant questions regarding theoperational characteristics and parameters of this new service, theeffect of this service on existing shippers’ rights and theavailability of Northern’s pipeline capacity from which this newservice may be offered,” the industrials told FERC.
They are concerned the LFT service would include negotiatedterms and conditions for individual customers, which is prohibitedby Order 637. Further, industrials said Northern Natural has failedto “address how it would determine when a Limited Day will becalled. Northern refuses to include in its tariff the criteria” forthis. Citing “little difference” between declaring a “Limited Day”or an operational flow order (OFO), industrials contend the”relevant [tariff] criteria should include, as in the case of OFOs,factors necessary to allow Northern to maintain its systemreliability and integrity.”
Also, they said the proposal “appears to allow” the pipeline tocurtail LFT on an equal basis with other firm services. This “woulddegrade the priority rights of all of Northern’s other existingfirm shippers (under rate schedules TF and TFX) because if LFTservice is curtailed pro rata with all other firm services, TF andTFX shippers would experience a greater volume curtailment withimplementation of LFT service than without the existence of LFTservice.”
In the event FERC chooses not to reject the proposed LFTservice, the Northern Municipal Distributors Group and the MidwestRegion Gas Task Force, as well as industrials, have called on theCommission to order Northern Natural to revise its tariff such thatfirm service shippers would have priority over LFT shippers when itcomes to nominations and scheduling at primary or alternate points,and that LFT service would be subject to intra-day bumping by firmshippers. Additionally, LFT should have a lower curtailmentpriority, the distributor group said. “Only in this way can therights of firm shippers be fully protected.”
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