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Enron Mail |
KERN RIVER AMENDS 2002 EXPANSION; DISPUTE FLAIRS OVER DISPOSITION OF CAPACI=
TY=20 AT WHEELER RIDGE Kern River Gas Transmission (CP01-31) recently amended its 11/15/00=20 application for authority to construct and operate facilities (2002 Expansi= on=20 Project) to serve new and existing powerplants in California as of 5/1/02.= =20 Because the 2002 Expansion now incorporates most of the facilities to be=20 installed for the short-term California Action Project (CP01-106), Kern Riv= er=20 needs only an additional 10,500 dth/d from Wyoming to California. The 10,50= 0=20 dth/d plus 114,000 dth/d expiring on 5/1/02 for California Action shippers= =20 will create 124,500 dth/d needed by all 2002 Expansion shippers. However, t= he=20 revised design includes the continuation of 21,000 dth/d of capacity - at t= he=20 Wheeler Ridge delivery point where Kern River interconnects with Southern= =20 California Gas Co. (SoCalGas) - available to California Action shippers=20 through 5/1/03, at which time Kern River will incorporate the 21,000 dth/d= =20 into its 2003 Expansion Project. In its April order certificating the=20 expedited California Action Project, FERC also directed Kern River to seek= =20 explicit authority to reserve excess capacity for planned future expansions= .=20 Kern River (RP01-411) complied with a tariff filing which triggered a prote= st=20 from the Firm Customers. The Firm Customers 1 claim that Wheeler Ridge is= =20 significantly constrained, and Kern River should not be able to reserve=20 capacity especially at that point until all existing firm shippers with=20 primary delivery point rights are reliably served. In the most recent=20 development, on June 4, Kern River answered that =01&it is not responsible= =018 for=20 problems downstream of Wheeler Ridge. California Action Project (CP01-106). FERC granted Kern River a certificate= =20 on April 6 to provide up to 135,000 Mcf/d of limited-term, incremental=20 capacity from Wyoming to California as of July 1 to address the urgent need= =20 for additional energy. In the order, the Commission recognized that upgradi= ng=20 the meter station at Wheeler Ridge would create =01&some excess capacity=01= 8 and=20 that Kern River planned to reserve that capacity for its 2003 Expansion. = =20 While the reservation of capacity was not precluded under its existing=20 tariff, Kern River told FERC that it would file for explicit authority to= =20 reserve capacity under the current circumstances. Noting that such capacit= y=20 would be available for interruptible and secondary firm deliveries between= =20 the in-service dates of the California Action and the 2003 Expansion, the= =20 Commission directedKern River to file a tariff provision within 30 days. In= a=20 request for rehearing filed May 7, the Firm Customers challenged FERC=01,s= =20 assumption that there will be =01&some excess capacity=018 at Wheeler Ridge= . They=20 cited evidence indicating that Wheeler Ridge is already constrained,=20 resulting in =01&significant=018 scheduling cuts (e.g., firm nominations cu= t 50% in=20 May). They insisted that expansion shippers should not have primary point= =20 access at Wheeler Ridge. In the alternative, expansion shippers should not= =20 enjoy the same level of firm service as existing shippers. This line of=20 argument was challenged by Kern River and expansion shipper Mirant Americas= =20 Energy Marketing LLC, who urged FERC to deny rehearing. Capacity Reservation Proposal (RP01-411). On May 7, Kern River filed a=20 revised tariff sheet, the Firm Customers filed a protest, and Kern River=20 answered. While they support expansion of Kern River into California, the= =20 Firm Customers fear that the proposed tariff language =01&is not sufficient= ly=20 conditioned toprevent Kern River from reserving (i.e., withholding) or=20 reselling capacity on an interim basis where there is no excess capacity to= =20 reserve or resell.=018 They are particularly concerned that Kern River may = be=20 able to withhold capacity, and/or sell incremental capacity on an interim= =20 basis, at Wheeler Ridge. The proposal =01&would permit Kern River to reserv= e=20 what it does not have (i.e., =01+excess capacity=01,) and to recapture what= it has=20 already sold (i.e., primary firm capacity held by existing Firm Customers)= =20 for sale to others.=018 This violates the Commission's regulations and is= =20 =01&contrary to every notion of due process, fairness, and the sanctity of= =20 contracts,=018 they said. As in their request for rehearing of the Californ= ia=20 Action order, the Customers cited evidence of =01&significant=018 schedulin= g cuts=20 at Wheeler Ridge. =01&Kern River should not be allowed to reserve (or sell)= =20 capacity at the Wheeler Ridge point until there is excess primary delivery= =20 point capacity at that point and sufficient downstream take-away capacity= =20 such that existing firm shippers=01, scheduling nominations for primary poi= nts=20 are not cut,=018 they said. Accordingly, they urged the Commission to rejec= t the=20 tariff filing to the extent that it allows reservation or interim sale of= =20 capacity at Wheeler Ridge; and to clarify that Kern River is not allowed to= =20 withhold excess capacity at any point on its system =01&when there are ship= pers=20 that are willing to pay maximum tariff rates for such capacity under=20 long-term contracts.=018 The Firm Customers failed to seek rehearing expre= ssly=20 on FERC=01,s directive about Wheeler Ridge, shot back Kern River. The attem= pt to=20 get FERC =01&to disallow in this docket what the Commission recognized and= =20 allowed in [CP01-106] is inappropriate,=018 the company said. In any case,= the=20 =01&essence=018 of their position was already set forth in the rehearing re= quest.=20 As before, the Firm Customers =01&disregard the fact that Kern River is not= =20 responsible for the market problems downstream of its Wheeler Ridge deliver= y=20 point,=018 but only for =01&reliably meeting its commitment to provide firm= =20 transportation deliveries=018 to that point. It has reliably delivered all= =20 quantities scheduled by SoCalGas for take-away and has the capacity to=20 deliver volumes up to the level of its firm contract obligations. Moreover= ,=20 a prohibition on reservation of capacity at Wheeler Ridge would change the= =20 facility design of the 2003 Expansion which, in turn, could delay a new=20 certificate filing beyond August 1 and the in-service date of the 2003=20 Expansion beyond 5/1/03. It could also could cause overbuilding of expansio= n=20 capacity and increase costs for both new and existing shippers. Amended 2002 Expansion (CP01-31). In the original application filed 11/15/0= 0,=20 Kern River proposed to provide up to 124,500 dth/d of new, firm, long-term= =20 contract demand as of 5/1/02. The amendment, filed May 11, proposes to=20 install an additional unit at Kern River=01,s Muddy Creek Compressor Statio= n in=20 Lincoln County, Wyoming; a new unit at its Daggett Compressor Station in Sa= n=20 Bernardino County, California; and an upgrade of its Opal Meter Station in= =20 Lincoln County, Wyoming. These facilities will cost approximately $31.4=20 million. A pro rata share (124.5 dth/d out of 145.5 dth/d) of California=20 Action costs will be allocated to the 2002 Expansion. Kern River renewed it= s=20 request for a predetermination of rolled-in rate treatment for the 2002=20 Expansion since the billing determinants (124,500 dth/d) will reduce existi= ng=20 rates by 6%-7%, offset in part by higher compressor fuel costs and electric= =20 compressor costs. To ensure recovery of actual costs from shippers flowing= =20 gas through Daggett (excluding California Action shippers subject to a=20 separate, incremental fuel in-kind reimbursement obligation), Kern River=20 still sought FERC approval of a pro forma tariff provision establishing an= =20 electric compressor fuel surcharge. However, the initial surcharge now=20 proposed is $0.0099 per dth of gas flow through the station, based on updat= ed=20 gas volumes and electricity costs. Kern River asked the Commission to act b= y=20 August so construction can begin at Muddy Creek by September 1, before the= =20 onset of winter in Wyoming.
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