Existing shippers on Transcontinental Gas Pipeline haveexpressed widespread opposition to the pipeline’s request to rollin the costs associated with its SouthCoast expansion project inGeorgia and Alabama.

They contend the SouthCoast expansion is Transco’s latest effortto try to segment its projects in order to circumvent the 5%threshold test for rolled-in rate treatment. When viewed by itself,they concede the rate impact of the SouthCoast project on existingshippers is below the threshold. But when considered in the contextof other recent Transco expansions – SunBelt, Mobile Bay andCherokee, to name a few – the shippers argue the rate impact on theexisting system is consideraly greater than the required 5%.

Consolidated Edison of New York called on the Commission to viewall four of the expansion projects as a single project to determinewhether Transco has met the 5% test. “To view the SouthCoastproject in isolation from SunBelt, Mobile Bay and Cherokee is toignore the reality that Transco is engaged in a major expansion ofits system over a relatively short period of time,” ConEd told FERC[CP99-392].

Washington Gas Light estimated the rate impact of the Sunbelt,Cherokee and SouthCoast projects would total more than $260million, and would exceed the 5% threshold. It further argued thatthe system benefits cited by Transco for rolling in the SouthCoastexpansion didn’t justify the higher costs.

Some existing Transco customers, especially those on the Sunbeltexpansion, insist that rolled-in rates would give SouthCoastshippers a competitive advantage over SunBelt shippers, who stillpay incremental rates. To even the score, South Carolina PipelineCorp. asked FERC to condition Transco’s request for rolled-intreatment for SouthCoast on the pipeline rolling in the costs ofits SunBelt expansion.

SCANA Energy Marketing opposed Atlanta Gas Light’s (AGL)subscription to SouthCoast capacity, and urged the Commission notto ratify the agreement – at least until a reverse auction isconducted that would allow existing Transco shippers to turn backunused capacity, thus enabling the pipeline to better size itsproposed expansion.

“…AGL does not need the SouthCoast capacity,” said SCANAEnergy, the largest non-affiliated marketer on AGL’s system. Inlight of the rapid pace of retail restructuring in Georgia, “AGL isalready foisting its upstream capacity on retail marketers inexcess of their reasonable present needs. Moreover, AGL will beleaving the business of holding upstream interstate capacity verysoon and certainly is not in a position to commit to use thiscapacity for any long term.”

AGL has entered into a precedent agreement with Transco for61,160 Dth/d of the 204,099 Dth/d SouthCoast expansion capacity,which would make it the second largest capacity-holder. The largestshipper, Santee Cooper, has signed up for 80,000 Dth/d. Transcosays shippers have executed agreements for the entire capacity ofthe proposed project, which is expected to give shippers greateraccess to Mobile Bay gas production.

Susan Parker

©Copyright 1999 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.