Appendix B Proposals in Docket No. CP89-2174-000 Deferred for Later Consideration Arkla seeks section 7(c) authority to operate the following facilities: (1) Line FM-56. This 31-mile, 30-inch pipeline, which Arkla owns one-half of, extends from an interconnection with Arkla's existing Line FT-18 in Ouachita Parish, Louisiana to an interconnection with ANR's Southeast mainline in Richland Parish, Louisiana. Included is a tap to ANR and also one to Trunkline Gas Company, which Arkla designates as Line FM-57. ANR owns the other one-half interest in Line FM-56, and is seeking section 7(c) authority to operate it in Docket No. CP89-2195-000. Line FM-56 was constructed under NGPA section 311 in 1987. Arkla also seeks here, along with ANR in its respective docket, section 7(c) authority to operate an expanded meter station at the interconnect with ANR's Southeast mainline. It will be constructed under section 311 when Line AC is completed. (2) Line FM-55. This 11-mile, 24-inch pipeline extends from the discharge side of Arkla's Sterlington Compressor Station to an interconnection on the inlet side with the Monroe Compressor Station of Texas Eastern Transmission Corporation in Ouachita Parish, Louisiana. It includes an existing tap to Louisiana Gas Services, Inc. and a tap to be constructed under section 311 that will interconnect with United Gas Pipe Line Company and be designated as Line FM-58. Line FM-55 was installed pursuant to section 311 in 1988. (3) Line FM-59. This line is a tap to Texas Gas on Arkla's existing, certificated Line FT-18 in Ouachita Parish, Louisiana. It was to have been constructed under NGPA section 311 and placed in service in December 1989. Appendix C Timely motions to intervene and notices of intervention were filed by the following parties; 1. Arkansas Public Service Commission 2. ANR Pipeline Company 3. Producer-Marketer Transportation Group 4. Texaco Inc. and Texaco Gas Marketing Inc. 5. Arkansas Western Gas Company 6. Tennessee Gas Pipeline Company 7. Texas Gas Transmission Corporation 8. City of Hamlin, Ohio 9. Arco Oil and Gas Company and Arco Natural Gas Marketing, Inc. 1See my separate statement attached to the Notice of Proposed Rulemaking in Docket No. 10. Enron Gas Marketing, Inc. 11. BP Gas Inc. 12. Williams Gas Marketing Company 17. St. Louis Industrial Gas Users 18. Natural Gas Pipeline Company of America 19. Delta Pipeline Company 20. Mississippi River Transmission Corporation 21. Texas Eastern Transmission Corporation 22. Enogex, Inc. 23. City of Winfield, Kansas 26. Memphis Light, Gas and Water Division, City of Memphis, Tennessee 27. United Gas Pipe Line Company 28. Anadarko Petroleum Corporation 29. Natural Gas Clearinghouse 30. Oryx Energy Company 31. Premier Gas Co. and Samson Energy Resources Co. 32. Association of Businesses Advocating Tariff Equity 33. Panhandle Eastern Pipe Line Co., Trunkline Gas Company, and Texas Eastern Transmission Corporation 34. Laclede Gas Company 35. Vesta Energy Company Untimely motions to intervene were filed by the following parties: 1. State of Louisiana 2. Marathon Oil Company 3. Apache Corporation 4. Williams Natural Gas Company 5. National Fuel Gas Supply Corporation Elizabeth Anne Moler, Commissioner, concurring. I concur with the conclusion that the public convenience and necessity warrant authorization of Arkla's proposal to operate Line AC under section 7(c) authority. However, I do not want my vote in favor of granting this certificate to be interpreted as favoring the construction of these facilities pursuant to section 311 of the NGPA. As I have said before,1 I continue to believe that our current policy exempting RM90-1-000, Revisions to Regulations Governing construction of pipeline facilities undertaken pursuant to section 311 is a violation of NEPA and is inconsistent with the Court's holding in Associated Gas Distributors v. FERC (AGD- [¶ 61,034] Revision of Rate Schedule Filings Under Sections 205 and 206 of the Federal Order No. 527-A; Order Denying Reconsideration and Clarifying Final Rule Before Commissioners: Martin L. Allday, Chairman; Charles A. Trabandt, [This rule was published in 56 Fed. Reg. 3029, on January 28, 1991, effective January 22, 1991 and appears at FERC Statutes and Regulations ¶ 30,912.] [¶ 61,035] Pacific Gas Transmission Company, Docket Nos. CP89-460-000, CP89-460-001, and CP90-1-000 (Not consolidated) Preliminary Determination of Nonenvironmental Issues (Issued January 22, 1991) Before Commissioners: Martin L. Allday, Chairman; Charles A. Trabandt, On October 3, 1989, Pacific Gas Transmission Company (PGT) filed an application in Docket No. CP90-1-000 for a Presidential Permit and for authorization, pursuant to section 3 of the Natural Gas Act (NGA), for the construction, operation, maintenance and siting of pipeline facilities at the U.S.-Canada border. Also in a prior order issued in Docket Nos. CP89-460-000 and CP89-460-001 on May 1, 1990,1 we deferred action on PGT's amended application for authority, pursuant to section 7(c) of the Natural Gas Act (NGA), to expand its existing facilities to interconnect with other pipelines to transport Canadian gas to the Pacific Northwest, the intermountain region and California. We also directed staff to convene a technical conference to address certain concerns raised by the application, as subsequently amended, and numerous responsive pleadings. Upon further consideration, we are prepared to grant the requested authorizations, with modifications, to the extent discussed below, (Footnote Continued) Certificates of Construction, FERC Statutes and Regulations32,477 (1990). 2 899 F.2d 1250 (D.C. Cir. 1990), reh'g denied, No. 88-1856 (D.C. Cir. June 4, 1990). 1 Pacific Gas Transmission Company and Altamont Gas Transportation Project, 51 FERC subject to a final order in the above-referenced dockets addressing environmental matters as part of a complete record in these proceedings. The order issued here does not consider or evaluate any of the environmental issues raised by the application. Those issues are still pending before the Commission and will be addressed in a subsequent order when our review and analysis of them are complete. Consequently, no certificate authorizations will be issued until a final decision is made by the Commission after consideration of all issues pertaining to the application.2 I. Background A. PGT's Existing System PGT owns and operates a natural gas pipeline system which extends approximately 612 miles from the U.S.-Canada border at a point near Kingsgate, British Columbia, to the Oregon-California border at a point near Malin, Oregon. It purchases approximately 1 Bcf per day of natural gas from Alberta & Southern ¶ 61,112 (1990). (Hereinafter referred to as the May 1 order.) 2 The Commission intends to complete the environmental work and consider a final order in the second quarter of 1991. Company Ltd. (Alberta & Southern), a wholly owned subsidiary of Pacific Gas & Electric Company (PG&E), PGT's parent corporation, at the international border, and transports that gas through the states of Idaho, Washington and Oregon, for resale to its sole sales customer, PG&E.3 PGT also purchases small amounts (less than 10 MMcf/d) of U.S. gas from the Rocky Mountain area. In addition, PGT has two firm pipeline transportation customers, Northwest Pipeline Corporation (Northwest) and Pacific Interstate Transmission Company (PITCO). In 1961, PGT began service for PG&E and Northwest's predecessor, El Paso Natural Gas Company (El Paso), over facilities which were certificated in 1960. Using the original facilities, PGT transports up to 150.7 MMcf/d of Canadian gas for the account of Northwest to delivery points in the states of Idaho, Washington and Oregon. PGT's original facilities interconnect with those of Northwest near Stanfield, Oregon. PGT also transports up to 300 MMcf/d of Canadian gas on behalf of PITCO through its existing system for delivery at the interconnection with the Northwest system near Stanfield. The firm service for PITCO is provided by 160.1 miles of existing 42-inch pipeline which loops portions of the 36-inch original facilities north of Stanfield. This looping was certificated in 1980 and constructed in 1981 as part of the Western Leg of the Alaska Natural Gas Transportation System (ANGTS) and is referred to as the "prebuild" facilities.5 PGT also provides interruptible gas transportation for a number of shippers under section 7(c) of the NGA and section 311 of the NGPA. PGT states that its proposed facilities, together with the expanded 3 PG&E is an operating public utility under the jurisdiction of the Public Utilities Commission of the State of California (CPUC) and a Hinshaw pipeline, engaged in supplying electric and natural gas service throughout most of Northern and Central California. 4 These facilities, originally certificated in Pacific Gas Transmission Company, 24 FPC 134 (1960), are referred to as the "original facilities" and consist of approximately 639 miles of 36-inch gas transmission lines and other related facilities certificated from 1960 to 1970. 5 The prebuild facilities were originally certificated by the Commission by orders issued January 11, 1980, January 13, 1980 and June 13, 1980 in Docket No. CP78-123 et al. Northwest Alaskan Pipeline Company et al. 10 FERC 61,032 (1980); 10 FERC [61,096 (1980), 11 FERC ¶ 61,302 (1980). 6 PGT states that PGT and PG&E have been selected by the President to construct and operate the U.S. portion of the Western Leg of the ANGTS and to transport Alaskan North Slope gas to the lower 48 states under ANGTA. The Commission has issued PGT a conditional certificate to construct and operate the Western Leg and a final certificate to prebuild California facilities of PG&E, will complete the U.S. portion of the Western Leg of the Alaska Natural Gas Transportation System (ANGTS).6 B. California Decision on Interstate Capacity On December 19, 1988 and February 24, 1989, the CPUC issued orders establishing a state proceeding to investigate the need for additional pipeline capacity to serve California. In its February 24 order, the CPUC determined, among other things, that a higher level of service for noncore customers is warranted and that additional pipeline capacity would enhance service to the California market. The CPUC directed the California utilities to enter into discussions with pipeline proponents, endusers and others to reach agreements as to new and/or existing pipeline capacity. The CPUC held a hearing before an administrative law judge (ALJ) during the summer of 1989 to receive evidence on the need for new capacity into California, capacity allocation, and cost allocation. In an Initial Decision issued on December 15, 1989, the ALJ found a need for 900 MMcf/d near-term capacity additions (1995) and 1.6 to 2.1 Bcf/d long-term capacity additions (by 2005) into the state of California. The ALJ recommended that the Kern River Transmission Company (Kern River) stand-alone project (in contrast to the Kern River/Mojave project) would best serve California's needs. The ALJ also recommended for approval a smaller 200 MMcf/d expansion by SoCal Gas. In February 1990, the CPUC issued its final decision modifying the ALJ's position by eliminating the preference for the Kern River standalone project in favor of further negotiations a portion thereof. The prebuilt U.S. portion of the Western Leg consists essentially of looping of the existing PGT and Northwest systems. The facilities proposed herein will complete the looping contemplated in the original conditional certificate and provide the same beneficial effect as the original prebuild which is to allow for early construction at lower cost, of facilities that will ultimately connect to Alaskan gas supplies. (See Pacific Gas Transmission Company, 1 FERC 61,248 (1977); Pacific Gas Transmission Company, Docket No. CP78-123 et al., 10 FERC 61,032 (1980); 10 FERC ¶ 61,096 (1980); 11 FERC 61,088 (1980)). 7 See Order Instituting Investigation on the Commission's Own Motion into the Interstate Natural Gas Pipeline Supply and Capacity Available to California, and Order Requiring Proposals for New Pipeline Capacity, Docket No. I. 88-12-027, issued December 19, 1988; Interim Opinion, issued February 24, 1989. 8 "Core customers" are residential and commercial customers who do not have alternative fuel capability. Noncore customers consist of everyone else. Core customers have the highest priority of service. Mojave Pipeline Company. 9 162 and competitive forces. The order also requires that the utilities shall show no preference for their own affiliates' gas supplies, except as required to fulfill preexisting contract obligations. II. PGT Applications A. Expansion Applications 1. The Original Application On December 8, 1988, PGT filed an application in Docket No. CP89-460-000, pursuant to section 7(c) of the NGA, for a certificate to construct and operate a substantial expansion of its already existing pipeline system and to provide firm transportation in interstate commerce of natural gas for certain large utility customers located in the Pacific Northwest (Washington and Oregon) and in California. The authorization requested would allow approximately 710 MMcf per day of natural gas on a firm annual basis to be received at Kingsgate, British Columbia. From Kingsgate, approximately 150 MMcf per day of gas on a firm annual basis would be delivered to the Pacific Northwest and 600 MMcf per day of gas on a firm annual basis would be delivered to an existing interconnection with PGT's parent, PG&E, at Malin, California. California deliveries would be completed through an expansion of the PG&E system. 10 2. The Amended Application On October 3, 1989, PGT filed in Docket No. CP89-460-001 its amendment to its expansion project to reflect the fact that capacity on its expansion project had been fully subscribed through the execution of exclusive precedent agreements. PGT's amendment altered the design of the proposed facilities in order to increase the volumes delivered and to provide seasonal service. The revised facility proposal includes 430 miles of 42-inch diameter looping on PGT's existing system, instead of 36-inch diameter looping as originally proposed. PGT also planned to add additional delivery points, to provide interruptible transportation, and to revise its proposed receipts and deliveries as follows: Receipts (including fuel and line losses): 872 MMcf/d at Kingsgate, British Columbia 62 MMcf/d at Stanfield, Oregon11 934 MMcf/d total receipts Deliveries: 150 MMcf/d in the Pacific Northwest 766 MMcf/d to PG&E near Malin, Oregon for deliveries to Kern County, California. 916 MMcf/d total deliveries12 PGT states that it intends to provide firm and interruptible transportation services on these new, incremental facilities. a. PGT's Expansion Project Shippers PGT's expansion shippers and their respective volumes, as of October 1990, are reflected in the chart below: PGT-PG&E Expansion Project Daily Contract Quantities at Associated Receipt and Delivery Points Annual Average MMcfd Winter MMcfd Summer MMcfd Pacific Northwest Kingsgate, BC to Spokane, Wash.: Washington Water Power. 10 On April 14, 1989, in Docket (A.) 89-04-033, PG&E filed an application with the CPUC for authority to expand its existing intrastate natural gas pipeline system from the California-Oregon border near Malin to Kern River Station. The expanded facilities would accommodate PG&E's receipt at Malin of Canadian gas from PGT for redelivery by PG&E at the Kern River Station, Kern River County, California. On October 3, 1989, PG&E filed its supplement to the application to increase the capacity of the expansion from 600 MMcf/d to 755 MMcf/d. On January 12, 1990, PG&E filed another amendment with the CPUC reflecting the partial assignments of the Precedent Agreement of the City of Long Beach. On November 27, 1990, a CPUC administrative law judge (ALJ) issued a preliminary decision, recommending that the CPUC grant PG&E authorization to build its expansion and to add its proposed delivery point at Kern River Station. However, the ALJ directed PG&E: (1) to demonstrate the need for its proposed 100 MMcf/d subscription to firm capacity on PGT's expansion project, and (2) to determine whether the market for natural gas transportation justifies construction of the PG&E project and demonstrate the reasonableness of such justification in its first general rate case. The ALJ directed that PG&E's general rate case will be filed no later than two years after PG&E has notified the CPUC of its acceptance of the certificate and no less than six months before the scheduled date of operation. b. Proposed Expansion Facilities PGT proposes to construct 430 miles of 42-inch pipeline looping along its existing system which will operate at the same maximum pressure as PGT's existing pipeline, which is 911 psig. PGT's existing compressor stations will be used. Horsepower additions are proposed at three compressor stations. PGT will install an additional gas-fired turbine and compressor at Compressor Station #3 in Northern Idaho, and replace existing 9,100 horsepower compressors at Compressor Stations #5 and # 7 in western Idaho and central Washington state with 25,000 horsepower gas-fired turbines and compressors. Turbines used to drive the other existing compressors are expected to remain in place for the new service. Compressor equipment replacement will be required on 22 existing units at 11 existing stations. Piping, control, and scrubber equipment changes will be required at 12 existing compressor stations. PGT states that it will expand existing metering facilities to allow for increased flows and additional taps and meters will be installed for off-line deliveries at Wallula, Washington and Hermiston, Oregon. 10 50 755 c. Capital Costs Capital costs, including allowance for funds used during construction, for the PGT portion of the expansion project are estimated, on a 1988 fourth quarter cost basis, at $635,050,000. PGT proposes to initially finance the expansion project with a projected mix of 70 percent debt and 30 percent equity capital. PGT proposes to depreciate the expansion project based on a 30-year life. d. PGT's Proposed Rate Design PGT proposes to render firm and interruptible transportation service via the expansion facilities. PGT proposes to add a new Rate Schedule T-3 and an associated form of service agreement for firm transportation to its FERC Gas Tariff Second Revised Volume No. 1. PGT states that it will provide interruptible transportation on the expansion facilities on an open-access basis using its currently effective system-wide interruptible transportation rate. The rate structure proposed for firm transportation consists of six mileage-based, onepart monthly reservation charges that recover the total incremental fixed costs allocated to firm transportation. PGT has allocated approximately four percent of the expansion facilities' cost of service to interruptible transportation |