In what has become a protracted and unusually complex case, FERC has said it would require Transcontinental Gas Pipe Line to pay Sunoco Inc. for any additional gathering costs that it incurs due to the pipeline’s violation of a 1992 settlement.
On voluntary remand granted by the federal appeals court in Washington, DC, the Federal Energy Regulatory Commission has ruled that if Transco sells its North Padre Island and Central Texas gathering facilities to affiliate Williams Gas Processing-Gulf Coast Co. LP. (WGP), it “will impose a remedy pursuant to its equitable discretion requiring Transco to reimburse Sunoco for any additional costs it incurs in the form of gathering charges from WGP as a result of Transco’s violation of the 1992 settlement,” the agency order said [RP02-309].
“We believe that this remedy is equitable and appropriate in light of the bargain struck in the 1992 settlement and the expected harm Sunoco will incur as a result of Transco’s violation of that settlement.” The FERC order vacated prior decisions in the case on the grounds that it may lack jurisdiction to enforce them.
The case stems from a 2002 complaint that Sunoco brought against Transco for seeking the transfer of the North Padre Island and Central Texas gathering systems to WGP. FERC at the time ruled in Sunoco’s favor, requiring Transco to obtain the necessary capacity at seven receipt points on the gathering facilities from WGP and assign it to Sunoco at the “rates, terms and conditions” that were spelled out in the agreement.
Transco argued then that the Commission’s via its remedies in the case was attempting to reassert jurisdiction over what would be WGP’s gathering facilities and services by “indirectly imposing the equivalent of an unlawful ‘default contract’ like that found beyond the Commission’s jurisdiction to enforce” in a case involving Conoco. “We believe that today’s remedy, limited to reimbursement for additional costs, does not constitute an indirect form of ‘default contract,'” the order said.
FERC approved the comprehensive spin-down of Transco’s gathering facilities to WGP in July 2001, but neither Transco nor Sunoco at the time mentioned that this would violate the terms of the 1992 settlement, which obligated the pipeline to provide firm transportation service to Sunoco for 20 years at the seven receipt points.
As a result of the pending sale, Sunoco estimated that it would have to pay $15 million to $28 million in charges to WGP that it otherwise would not have had to pay under the 1992 settlement.
Transco has not yet informed the Commission that it has, in fact, sold the facilities, the agency said. “Accordingly, the abandonment is not yet effective and Transco continues to provide service to Sunoco from the subject receipt points pursuant to the terms of the [firm transportation] contract executed with Sunoco under the 1992 settlement,” the order said.
©Copyright 2005Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |