the manufacturer or a similar unit in service elsewhere, for the proposed compressors, manufacturer's specifications and attenuation data for the intake and exhaust silencers finally selected, a description and diagram of the final design of the proposed compressor building, and a revised acoustical analysis reflecting the actual noise control equipment, for review and written approval of the Director, Office of Pipeline and Producer Regulation, before commencing construction of the compressor facilities.

(G) United shall file with the Secretary of the Commission a noise survey of the Hall Summit Compressor Station no later than 30 days after placing the compressor station in

service. If the noise attributable to the operation of the compressors at full load exceeds an Ldn of 55 dBA at any nearby noise-sensitive areas, additional noise controls shall be added to meet that level within one year.

Appendix

Docket No. CP90-1941-000

Interventions

Marathon Oil Company

Mississippi River Transmission Corporation
Southern Natural Gas Company
Texas Eastern Transmission Corporation
Texas Gas Transmission Corporation
United Municipal Distributors Group

Background

On June 15, 1990, United filed tariff sheets to flowthrough take-or-pay charges billed to it by its upstream supplier, Sea Robin Pipeline Company (Sea Robin). United used the same purchase deficiency allocation method used by Sea Robin. In the July 13, 1990 order, the Commission accepted and suspended the tariff sheets subject to refund and conditions. The order directed United to refile tariff sheets to reflect the recalculation of the allocation of take-or-pay costs to Louisiana Gas Service Company based on an adjustment to the calculation of its purchase deficiencies required by the order. That order also required United to submit an explanation of the manner in which it estimated carrying charges and to submit working papers supporting the derivation of its jurisdictional allocation factor. United was also directed to respond to the allegation that United is continuing to sell gas to certain nonjurisdictional customers which United stated had left the system and which were not reflected in the take-or-pay allocation. United

1 First Substitute Original Sheet Nos. 4-S, 4-T, 4-U, 4-V, 4-W, 4-W1, and 4-X to FERC Gas Tariff, Second Revised Volume No. 1.

made this compliance filing in order to address each of these concerns.

Public Notice and Intervention

Public notice of this filing was issued on August 13, 1990, providing that interventions or protests should be filed by August 23, 1990. Timely motions to intervene and protests were filed by Mississippi River Transmission Corporation and the United Municipal Distributors Group. Pursuant to Rule 214 of the Commission Rules of Practice and Procedure,3 timely motions to intervene are granted unless an answer in opposition is filed within 15 days of the date such motions are filed. The motions to intervene are granted in accordance with Rule 214. In addition, Entex, a Division of Arkla, Inc. filed a motion for leave to intervene out of time. The Commission finds that granting this motion at this early stage of the proceeding will not prejudice the interests of any other party and that good cause exists to permit the late intervention. Therefore, the motion to intervene out of time is granted.

Discussion

As noted above, United's filing allocates take-or-pay costs based on the purchase deficiency methodology. The purchase deficiency method of allocating take-or-pay charges has

252 FERC 61,079 (1990).

3 18 C.F.R. § 385.214 (1990).

been found by the United States Court of Appeals for the District of Columbia to violate the filed rate doctrine. On October 9, 1990, the Supreme Court of the United States denied the request for certiorari of the AGD II decision filed by the U.S. Solicitor General on behalf of the Commission, and the Court of Appeals' mandate issued October 17, 1990.

On November 1, 1990, the Commission issued Order No. 528 [53 FERC ¶ 61,163] in which it addressed the issue of the collection by interstate natural gas pipelines of the take-orpay settlement costs included in their fixed charges in light of the court's decision. Among other things, the Commission stayed the authority of all pipelines (except those specifically excluded) to collect fixed charges based on a purchase deficiency methodology, effective 30 days from the publication of Order No. 528 in the Federal Register.5 In addition, the Commission permitted pipelines subject to Order No. 528 to file new tariff sheets to replace the stayed provisions.

Since United's recovery of the costs included in this particular filing is subject to the requirements of Order No. 528, United's filing must be rejected since it uses the unlawful purchase deficiency allocation method. Order No. 528 identified certain filings of pipelines that are not subject to the stay because these filings are the result of settlements which the Commission had approved and which had become effective, or are the subject of Commission orders that have become final and nonappealable. By order issued December 14, 1990,6 the Commission postponed application of the Order No. 528 stay for United's filings recovering the costs of its own settlements with its producers until 30 days after the Commission

issues a final order on United's settlement with its customers concerning those filings. However, United's comprehensive settlement applies only to the allocation of United's takeor-pay costs paid to its producer suppliers, not to the flowthrough of take-or-pay costs from Sea Robin. The December 14, 1990 order also stated that United's first filing to flowthrough take-or-pay costs from Sea Robin in Docket No. RP89-147-000 was final and nonappealable, and therefore not subject to the Order No. 528 stay. However, the tariff sheets here at issue relate to a subsequent United filing to flowthrough additional costs being billed to it by Sea Robin. The July 13, 1990 order accepting that filing specifically made United's tariff sheets subject to the outcome of AGD II. Furthermore, pending requests for rehearing of the July 13, 1990 order raise the filed rate doctrine. Therefore, the Commission finds that the costs sought to be recovered in this filing are subject to Order No. 528.

Because the subject filing is not exempt from Order No. 528 and the filing perpetuates the now unlawful purchase deficiency allocation method, the Commission concludes that it is appropriate to reject United's filing without prejudice to United's refiling to recover these costs under the principles of Order No. 528. Because the Commission is rejecting the tariff sheets, it is not necessary to address the issues raised in the protests.

The Commission orders:

United's tariff sheets referenced in footnote number one are rejected without prejudice to United's refiling tariff sheets which conform to the principles of Order No. 528.

4 Associated Gas Distributors v. FERC, 893 F.2d 349 (D.C.Cir. 1989), cert. denied, 59 U.S.L.W. (October 9, 1990) (AGD II).

5 Order No. 528 was published in the Federal Register on November 16, 1990. 53 Fed. Reg. 47,863.

6 53 FERC ¶ 61,380 (1990).

7 United's comprehensive settlement filed on November 28, 1988, was intended to resolve the issue

Rule 207 of the Commission's Rules of Practice

in some 19 dockets involving United, including proceedings involving the allocation of take-or-pay costs paid by United to its producer suppliers. The settlement was approved subject to conditions. However, requests for rehearing of the take-or-pay issues are pending before the Commission and, thus, the take-orpay provisions of them are not final. 46 FERC ¶ 61,314 (1989), reh'g. granted in part, 49 FERC 61,096 (1989), reh'g. granted in part, 50 FERC

1

and Procedure, a petition for waiver to the extent necessary to revise or replace delivery points under existing Service Agreements for firm, preferred, and interruptible transportation and sales service between Florida Gas and four of its customers, i.e., Florida Power and Light (Florida Power), the City of Lakeland (Lakeland), Peoples Gas System, Inc. (Peoples), and St. Joe Natural Gas Company (St. Joe), and to permit these shippers to maintain their existing priority in Florida Gas' firstcome, first-served queues. As discussed below, the petition for limited waiver is granted.

Background

On October 17, 1989, Florida Gas filed a comprehensive Settlement to permit Florida Gas, inter alia, to implement open-access transportation under a blanket certificate, extend its existing certificated system capacity by 100,000 Mcf per day, and completely restructure its sales and transportation service. On June 15, 1990, the Commission issued an order accepting the Settlement with modification.2 The Commission rejected a provision of the Settlement which would have granted blanket authorization to permit a shipper, in cases where Florida Gas constructs an additional delivery point, to transfer all or a portion of its transportation entitlement without that transfer of delivery points constituting a new request for transportation service. The Commission explained that this provision conflicted with Commission policy and would give preferential treatment to shippers requesting the construction of new delivery points.

Under Florida Gas' current Firm Transportation (FTS-1), Preferred Transportation (PTS-1), and Interruptible Transportation (ITS-1) Rate Schedules, a request for a new delivery point constitutes a request for new service and, therefore, the customer would not retain its previous priority. Florida Gas requests permission to waive this requirement to permit Florida Power, Lakeland, Peoples and St. Joe to add a new delivery point without losing priority in the first-come, first-served queue.

The Petition for Waiver

In its request for a waiver, Florida Gas asserts that Florida Power, Lakeland, Peoples (Footnote Continued)

¶ 61,276 (1990), reh'g. granted in part, 51 FERC ¶ 61,242 (1990).

118 C.F.R. § 385.207 (1990).

2 51 FERC 61,309 (1990).

3 As necessary, Florida Gas states that it will file a prior notice application pursuant to section 157 of the Commission's regulations to revise Florida

and St. Joe would like Florida Gas to construct, add, change and/or replace delivery points due to extenuating circumstances and operational needs. Upon Florida Gas' receipt of the requested waiver, Florida Gas states that it and its customers are willing to construct, add, change and/or replace the delivery points under the affected Service Agreements.

In support of its request for waiver, Florida Gas asserts that it is not proposing to increase certificated volumes to be delivered to these customers. Further, Florida Gas asserts, the granting of the waivers will allow the customer to add a new delivery point while maintaining its place in the queue, but will neither change the ultimate recipient of the gas, nor bump any of Florida Gas' existing firm shippers. Florida Gas states that in each instance adding the delivery points on behalf of these customers will not violate the Commission's first-come, first-served principle because the same endusers and/or the same customers would be served by the new delivery points; the additional delivery points are in the same geographic location as the customers or end-users; and the addition of any new delivery points will not interfere with Florida Gas' ability to render firm service to any customer. Moreover, Florida Gas states that it is willing to request similar waivers on behalf of any of its other customers/shippers seeking to add a delivery point to an existing service agreement if these same conditions are satisfied.

Florida Power. Florida Power is a transportation and direct sales customer of Florida Gas. Florida Gas delivers gas to Florida Power at least 11 delivery points, including the Lauderdale-Broward County delivery point located on the southwest side of the Lauderdale Power Plant. Florida Gas states that this existing Lauderdale delivery point cannot accommodate Florida Power's need for varied gas pressure in its steam and gas turbine generating units.3 Therefore, on March 5, 1990 in Docket No. CP90-909-000, Florida Gas filed an application under section 7(c) of the Natural Gas Act (NGA) requesting authorization to construct and operate 2.3 miles of 24-inch pipeline, metering and other facilities necessary to deliver gas on the northeast side of Florida Power's Lauderdale Power Plant. These facilities are intended to replace the existing Lau

Power's Primary Interruptible Direct Sale Contract dated April 1, 1979.

+ On November 19, 1990, the Commission issued an order in Docket CP90-909-000, approving Florida Gas's application for a certificate of public convenience and necessity authorizing the construction and operation of a new pipeline lateral and two new delivery points. 53 FERC 61,206 (1990).

derdale Power Plant delivery facilities and increase the flexibility for all volumes Florida Gas delivers to this plant. These facilities will enable Florida Gas to measure separately and Florida Power to regulate separately two streams of gas delivered by Florida Gas at the Lauderdale Power Plant. They will also accommodate the varied pressure requirements which the existing pipeline lateral cannot do.

Florida Gas seeks waiver of the Commission's first-come, first-served policy and § 3.3(b) of its FTS-1, PTS-1 and ITS-1 Rate Schedules as necessary to allow Florida Power to maintain its existing position in Florida Gas' queues, while permitting deliveries through the facilities authorized in Docket No. CP90-909-000 at Florida Power's Lauderdale Power Plant under Florida Power's FTS-1 and ITS-1 Service Agreements and Primary Interruptible Direct Sales Contract with Florida Gas by the inservice date of the facilities proposed in Docket No. CP90-909-000.

Lakeland. Lakeland is also a transportation and direct sales customer of Florida Gas which purchases gas from Florida Gas for consumption in its electric generating power plants serving the City of Lakeland. Florida Gas currently delivers gas to Lakeland for use at Lakeland's Larsen and McIntosh plants. Lakeland has requested that Florida Gas construct a new delivery point on the St. Petersburg Lateral in order to relieve an existing capacity constraint on Florida Gas' existing 6-inch line and on the existing Lakeland pipeline between the Larsen and McIntosh Plants, through which deliveries to the McIntosh Plant are made, located approximately 2.5 miles northwest of the Larsen Plant.

Florida Gas states that the proposed delivery point will enable Lakeland to receive gas directly at the McIntosh Plant via a 16-inch line to be constructed, owned and operated by Lakeland. Florida Gas further states that the addition of the proposed delivery point will not result in increased deliveries of gas, but will enable Lakeland to take full advantage of the open-access transportation services it contracted for during Florida Gas' settlement pro

cess.

Florida Gas seeks waiver of the Commission's first-come, first-served policy and § 3.3(b) of Florida Gas' FTS-1, PTS-1 and ITS-1 Rate Schedules as necessary to permit Lakeland to maintain its existing position in Florida Gas'

5 Florida Gas states it will file with the Commission any necessary certificate and/or prior notice applications to effectuate the addition of a customer's new delivery points to the affected agreement.

6 Florida Gas anticipates filing a prior notice application pursuant to section 157 of the Commis

queues while adding a new delivery point on Florida Gas' St. Petersburg Lateral in Polk County, Florida, to Lakeland's FTS-1, PTS-1 and Interruptible Sales Agreement Service Agreements and Lakeland's Preferred Interruptible Contract by January 1, 1991.

Peoples. Peoples is Florida Gas' largest jurisdictional resale customer. Florida Gas currently delivers gas to Peoples at 32 delivery points. On November 1, 1989, Southern Gas Company (Southern Gas), a local distribution company, and Florida Gas entered into transportation and sales service agreements under Florida Gas' Rate Schedules FTS-1, General Sales and Preferred Sales, all of which provided for the delivery of gas to Southern Gas' Oneco and Sarasota delivery points located in Manatee County and Sarasota County, Florida, respectively. On March 20, 1990, Peoples acquired the interest of Southern. As a result of the acquisition, Peoples has two firm transportation, two general sales, and two preferred sales Service Agreements. On December 31, 1990, Florida Gas filed a certificate application in Docket No. CP91-786-000 pursuant to section 7(c) of the Natural Gas Act (NGA) to merge the Service Agreements of Southern Gas into its existing Service Agreements to provide for the increased maximum daily and annual quantities, and additional delivery points, of Southern Gas.

Florida Gas seeks waiver of the Commission's first-come, first-served policy and § 3.3(b) of Florida Gas' FTS-1, PTS-1 and ITS-1 Rate Schedules as necessary to allow Peoples to retain its existing priority in Florida Gas' queues, while adding Oneco and Sarasota delivery points to Peoples' FTS-1 Service Agreement by January 1, 1991.

St. Joe. St. Joe is a local distribution company. Florida Gas currently delivers gas to St. Joe at the Port St. Joe delivery point in Gulf County, Florida. Florida Gas states that during settlement negotiations, Florida Gas and St. Joe originally agreed to upgrade St. Joe's existing delivery point, located 17.3 miles south of the proposed delivery point, and to add 16 miles of 6-inch loop to the line serving the existing delivery point. The upgrade and the loop were necessary so that St. Joe could receive its certificated volumes. However, St. Joe would now like Florida Gas to build a new delivery point north of the existing delivery point. Florida Gas would deliver a portion of

sion's regulations for authority to construct the new delivery point and to reassign volumes of gas between Lakeland's existing and new delivery point.

St. Joe's maximum daily quantities to the new delivery point and the remaining portion to the existing delivery point. The quantities delivered to both delivery points will not exceed St. Joe's total certificated capacity allocations."

Florida Gas seeks waiver of the Commission's first-come, first-served policy and § 3.3(b) of Florida Gas' FTS-1, PTS-1 and ITS-1 Rate Schedules as necessary to allow St. Joe to maintain its existing priority in Florida Gas' queues, while adding a new delivery point on Florida Gas' Basic Lateral in Gulf County, Florida to St. Joe's FTS-1 Service Agreement by October 1, 1991.

Public Notice and Intervention

Public notice of the above filing was issued on October 22, 1990, providing for motions to intervene or protests to be filed by October 29, 1990. Timely motions to intervene have been filed by the companies listed in the attached Appendix. In addition, protests were filed by Entrade Corporation (Entrade) and jointly by Thermo Electron Corporation (Thermo) and South Florida Cogeneration Associates (SFCA). Thermo and SFCA later amended their joint protest.

In its protest, Entrade states that Florida Gas should seek waivers for all customers with delivery point problems or for none. Similarly, Thermo and SFCA state the criteria for such waivers should be incorporated in Florida Gas' tariff, and changes in delivery points should be available to shippers as a matter of right if the criteria are met. In its motion to intervene, Peoples states that the Commission should ensure that elevated pressure deliveries made in connection with the new delivery points do not adversely impact future service to Peoples and other customers anywhere on Florida Gas' system.

Discussion

The Commission's policy limits delivery point flexibility. Under the Commission's policy, when a shipper seeks to add a new delivery point to an existing transportation agreement, the change is considered a request for new service and the shipper may not retain its previous priority in the first-come, first-served queue at the new delivery point. The Commission has explained that the purpose behind this policy is to prevent the first-come, first-served principle from being undermined by such practices as capacity brokering," and to prevent pipelines from discriminating against any shipper in constructing facilities to deliver supplies. 10 The Commission has, however, granted waivers of the application of this policy on a case-by-case basis when the Commission finds that in the particular circumstances, the waiver is justified and will not undermine the first-come, first-served principle.

Upon review of Florida Gas' request for waiver and the additional information furnished by Florida Gas in response to a staff data request,11 the Commission finds that the circumstances justify the waivers sought by Florida Gas. Florida Gas is currently fully subscribed for both firm and preferred services, and no change in the level of either firm or preferred service is being proposed for Florida Power, Lakeland, Peoples or St. Joe. Further, the waivers will have no impact on any other firm customers of Florida Gas.

The requested waivers for Florida Power, Lakeland, and St. Joe will have no impact on any other Florida Gas customers. The waivers will merely provide operational and administrative flexibility to Florida Power, Lakeland and St. Joe without causing them to fall from their existing place in the queue. Florida Power's new delivery point is immediately adjacent to the existing delivery point. Therefore, there will be no impact on future interruptible customers because Florida Power can take all quantities released to it through existing delivery points. Lakeland's proposed delivery point will be connected to the St. Petersburg Lateral at the same point as the existing lateral connects. Therefore, there will be no impact on other firm customers on the system. St. Joe is the only customer with a firm

10 Transwestern Pipeline Company, 46 FERC 61,251 (1989).

11 After an initial review of Florida Gas's filing, staff determined that additional information was necessary in order to evaluate the request. On November 8, 1990, staff requested that Florida Gas submit certain additional information. Florida Gas responded in letters dated November 23, 1990 and December 20, 1990.