Over bitter opposition from ANR Pipeline, the Federal EnergyRegulatory Commission issued a certificate to the 149-mile Guardianpipeline project, giving the upper Midwest another major gastransporter.

Guardian will be capable of delivering 750,000 Dth/d frominterconnections with Alliance, Northern Border, Midwestern GasTransmission, and Natural Gas Pipeline of America. FERC concludedthat “on balance, the proposed Guardian pipeline would providesubstantial public benefits with minimal adverse impacts.”

The $224.3 million pipeline will run from the Chicago hub nearJoliet, IL, through northern Illinois and southern Wisconsin toIxonia, WI. It is expected to be in service in November 2002. Theproject is an outgrowth of a June 1998 request for proposals fromWisconsin Gas, the state’s largest gas distributor. Wisconsin Gasput out the RFP to look for alternatives to its main transporterANR Pipeline. It chose a proposal by CMS Energy and Viking Gas andsigned a contract for 650,000 Dth/d. Wisconsin Gas’ parent company,Wicor Inc., later took a one-third stake in the project. WisconsinGas plans to build a new lateral on its distribution system toconnect to Guardian at Ixonia.

Contrary to the comments of ANR Pipeline, the Commission foundthat Guardian was not the product of unfair and anti-competitivebehavior. In its protest and request for rehearing, ANR hadprovided evidence showing the Guardian project would forceWisconsin Gas ratepayers to pay a total of $175-$242 million morethan if they continued receiving service through ANR. The companyalso charged that Wisconsin Gas’ selection of Guardian was not theproduct of prudent or fair analysis of competitive options butrather was the product of anti-competitive self-dealing between theLDC and its parent company.

However, FERC said the choice of Guardian over ANR was areasonable business decision given that Wisconsin Gas’ contractswith ANR were expiring, that it had to make a long-term commitmentfor a substantial amount of transportation capacity and that itdesired the benefits of pipeline competition. ANR, which deliversmost of the gas consumed in the State of Wisconsin, lowered itsrates because of competition with Guardian. “Over the long term, inorder for shippers to have true competitive pricing there needs tobe more than one pipeline competing to provide service,” FERC said.

ANR also warned FERC the Guardian project would lead tosignificant turned back capacity on its system. But the Commissionquestioned how ANR could be making that argument at the same timeit was filing several expansion projects to meet increasing gasdemand in Wisconsin.

“We find subsequent events generally contradict ANR’s level ofconcern over the impact the proposed Guardian facilities will haveon its pipeline and its customer,” FERC said in its draft order onrehearing and issuance of a final certificate. “Accordingly, wefind the impact of the proposed Guardian pipeline on ANR will beminimal.”

Although FERC received numerous comments from landowners inopposition to the project, it concluded the impact would be minimalbecause Guardian agreed to 20 out of 34 route changes and because90% of the project runs through farmland.

Rocco Canonica

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