In its nearly two years of operation the U.S. portion of North Baja Pipeline has lost money so far, principally because one of its early subscribers defaulted and the capacity hasn’t been re-sold. This information was revealed in a FERC filing by Gas Transmission Northwest (GTN), the national gas pipeline portion of the former PG&E Corp. merchant energy unit that is now undergoing Chapter 11 reorganization. GTN is in the process of being sold to TransCanada.

A joint venture with subsidiaries of Sempra Energy, which controls the 140-mile pipeline segment paralleling the international border in North Baja California, Mexico, the 80-mile U.S. portion running through the eastern edge of California from the Arizona border operated at a deficit of almost $8 million for the 12-month period ended June 30, with costs of $25.9 million and revenues of $18.1 million, according to the GTN Aug. 5 federal filing (RP04-448).

Even with the loss, North Baja has no plans to file for a rate increase at the Federal Energy Regulatory Commission on the 500 MMcf/d line that opened in September 2002, according to the filing earlier this month.

Part of the deficit was attributed to the default of Canadian-based CEG Energy Option, whose contract with North Baja was terminated by the pipeline in March 2003. The pipeline has yet to resell the capacity on a firm basis. Contracts with two other shippers call for a gradual ramp-up in volumes to maximum levels by Jan. 1, 2006. The shippers on North Baja all hold long-term, negotiated-rate deals, so an increase in rates would not increase revenues from these existing shippers.

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