Midweek Energy Updates: August 23, 2017

The full version of these articles will appear in The Foster Report No. 3163, published on August 25, 2017

 

FERC Issues Declaratory Order for Stakeholder Midstream Pipeline’s Tariff and Rate Structure

August 21, 2017

The Commission on August 18, granted Stakeholder Midstream Crude Oil Pipeline LLC’s (OR17-5) petition for a declaratory order (DO) for the tariff, rate structure, and prorationing policy for a new crude oil gathering system.

Findings. The Commission found that the transportation service agreement (TSA) is consistent with Commission precedent; that the open season followed Commission guidelines; that the proposed rate structure and treatment of the committed rate as a settlement rate is consistent with Commission precedent; that the proposal to allow committed shippers priority access for up to 90% of project capacity and 10% reserved for uncommitted shippers is approved; and that the TSA provision allowing for adjustments to the committed rates based on the Commission’s indexing methodology, under which Stakeholder is not obligated to decrease the committed rates, is consistent with Commission precedent.

The Commission also approved the TSA mechanism for rate adjustments or the implementation of surcharges to recover expenses incurred to comply with a change in law as defined in the TSA and as applied to the committed shipper; found that the proposed proration policy is reasonable and consistent with Commission precedent; and determined that the TSA provisions regarding term extensions, expansion capacity rights, the right to designate third party shippers, and the ability to designate additional origin or destination points, are also consistent with Commission precedent.

 

Maryland Agencies Urge FERC to Reject Eastern Shore’s Attempt to Increase Rates

August 21, 2017

Eastern Shore Natural Gas Co.’s (RP17-363) motion to place suspended tariff records into effect should be denied because Eastern Shore has offered no justification for the increase in the rates, said the Maryland Public Service Commission and Maryland Office of People’s Counsel in a joint filing August 18.

FERC staff on March 20 accepted and suspended Eastern Shore’s proposed rate increase under Section 4 of the Natural Gas Act (NGA), setting it for hearing and settlement procedures.[1]  Numerous parties protested the $18.9 million rate hike.[2]

The FERC staff order accepted and suspended the proposed rate increase for the maximum period, to become effective 8/1/17, subject to refund.

On July 31, Eastern Shore moved to place the suspended rates into effect on August 1. Easton Utilities Commission said in a protest August 14, that while the marked-up tariff sheets mostly reflected downward adjustments, the Rate Schedule IT maximum rates for Eastern Shore’s delivery zones were increased from their suspended levels.[3] Also, Eastern Shore’s Incremental Rate Schedule OPT<90 service was increased, and those rates were not in the suspension order, said Easton.

The Maryland agencies’ answer to the motion is similar to Easton’s, because the agencies question Eastern Shore’s rate increase. Specifically, the Maryland agencies say the Rate Schedule IT maximum rates for Eastern Shore’s delivery zones were increased from their suspended levels, and the Incremental Rate Schedule OPT<90 service was increased, but those rates were not in the suspension order.

Eastern Shore failed to provide any reason for the increase, the Maryland agencies say, and under NGA section 4(d) Eastern Shore failed to provide the required 30 days’ notice for a rate change.

The Maryland agencies ask the Commission to deny Eastern Shore’s motion to place the tariff sheets into effect, and reject the proposed tariff sheets.

[1]  See, FERC Staff Accepts Eastern Shore Rate Hike, Sets Case for Hearing, Settlement Procedures, FR No. 3141, pp. 38-39.

[2]  For previous coverage, see, Eastern Shore Responds to Critics of Rate Case Filings, FR No. 3137, pp. 14-16.

[3] See, Easton Utilities Asks FERC to Reject Eastern Shore’s Tariff Sheets, FR No. 3162, p. 18.

 

Appeals Court Rejects Constitution Pipeline Challenge of State CWA Certificate Denial

August 18, 2017

A federal appeals court in New York on August 18 rejected Constitution Pipeline Co. LLC’s appeal of the New York State Department of Environmental Conservation’s (NYSDEC) denial of a water quality certificate under the Clean Water Act (CWA), dealing a blow to the Constitution project.

The U.S. Court of Appeals for the Second Circuit ruled that the NYSDEC decision to deny Constitution’s certificate under Section 401 of the CWA was reasonable, particularly after Constitution did not provide the relevant information asked for by the state agency. “We conclude that NYSDEC’s actions were within its statutory authority and that its decision was not arbitrary or capricious,” the court said, denying Constitution’s petition (Constitution Pipeline v. New York State Department of Environmental Conservation, No. 16-1568).

Without the certificate from the NYSDEC, Constitution has not been able to begin construction of its pipeline to move natural gas from Pennsylvania through the southern portion of New York to Northeast markets via a 124-mile, 30-inch diameter pipeline. FERC approved the project (CP13-499) on 12/2/14, and after the NYSDEC denied Constitution its water quality certificate in April 2016, the Commission granted an extension of time through 12/2/18 to complete construction of the pipeline.

Constitution said it is not without recourse, however, and it is pleased that the Second Circuit upheld the authority of the Natural Gas Act (NGA) and deferred jurisdiction to the U.S. Court of Appeals for the District of Columbia Circuit for a ruling on the timeliness of the NYSDEC decision.

Constitution referred to the D.C. Circuit’s June 23 decision that directed Millennium Pipeline Co. LLC to make its case directly with FERC on whether the Commission deems it necessary to obtain approval from the NYSDEC after the state agency had not acted on Millennium’s application for a certificate for its Valley Lateral project under the CWA within the one-year period allowed under the CWA.

“While we would have preferred an immediate path to construction, we are pleased with the court’s resolution of this jurisdictional issue,” Constitution said in a statement. In its ruling, “the Second Circuit recognized the jurisdiction of the D.C. Circuit, and the D.C. Circuit has recently acknowledged FERC’s authority to make the ultimate decision under the Natural Gas Act,” Constitution said.

 

Colonial Asks FERC to Reject Murphy Oil’s Response in Protest Case

August 22, 2017

Murphy Oil USA Inc. failed to establish good cause for the Commission to accept its response in a protest case about Colonial Pipeline Co.’s (IS17-522) proposed tariff revisions, Colonial says in an August 21 response.

Colonial argues that Murphy Oil’s response is untimely, procedurally deficient, and improperly offers arguments it had not previously raised. On July 20, FERC’s Office of Energy Market Regulation issued an order accepting and suspending Colonial’s tariff filing, subject to refund and further Commission order.

Colonial asks the Commission to issue a final order accepting its revised tariff, because there are no facts to support Murphy Oil’s claim that the tariff will economically disadvantage Murphy Oil; Colonial will change its process to provide exact information to Murphy Oil about the concentration of biodiesel to be blended on the Greensboro Line; and the rates for transportation service is the same for all ultra-low sulfur diesel (ULSD) shippers.

The Commission issued an order on July 20, and Murphy Oil shouldn’t be allowed another opportunity to raise arguments that were already before the Commission when it issued the order, said Colonial. Murphy Oil also failed to show good cause for its filing to be accepted, said Colonial, particularly because Murphy Oil is trying to raise some new arguments.

Colonial also contends that, if the Commission accepts Murphy Oil’s response, the issues raised mischaracterize certain facts. In particular, Colonial said that Murphy Oil will not receive a less valuable product than the product it tenders for transportation, because the blending of biodiesel into the product will have no effect on the character of the product.

 

FERC Denies Stay, Challenge of Tolling Order on Atlantic Bridge Project

August 22, 2017

FERC addressed a group of challenges to its approval of the Atlantic Bridge pipeline project (CP16-9) in a pair of August 21 orders, denying a stay sought by the town of Weymouth, Massachusetts, and others, and rejecting a challenge to a tolling order filed by Weymouth.

Weymouth, where a new compressor station is slated for construction, filed a motion for stay along with a request for rehearing of a tolling order that provided FERC more time to consider challenges of its 1/25/17 order approving a Natural Gas Act Section 7(c) certificate for the project. Similar motions were filed by the city of Quincy, Massachusetts, Rebecca Haugh, Lori and Michael Hayden, and environmental advocacy groups, FERC related in the order denying a stay.

FERC has yet to issue an order on the merits of the requests for rehearing that contested its approval of the Atlantic Bridge project, which is being developed by Algonquin Gas Transmission LLC and Maritimes & Northeast LLC and is under construction. The $452 million project is designed to add 132,705 Dth/d of capacity on the Algonquin system from New Jersey receipt points up through New York and into Massachusetts. It calls for additional compression at existing compressor stations in New York and Connecticut and a new compressor station in Weymouth, with new pipeline construction limited to the replacement of 6.3 miles of 26-inch diameter pipe with 42-inch diameter pipe.[4]

[4]     For past stories, see Algonquin, Maritimes Pipelines Answer Intervenors’ Critique of FERC Order Approving Atlantic Bridge Project, FR No. 3140, pp. 19-26, FERC Issues Tolling Order for Algonquin’s Atlantic Bridge Project, FR No. 3142, pp. 37-38.

 

These articles will appear as published in The Foster Report No. 3163, being issued on August 25, 2017

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