[Federal Register Volume 60, Number 102 (Friday, May 26, 1995)]
[Notices]
[Page 27970]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12989]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
[Docket No. PL94-3-000]
City of Hamilton, Ohio; Order on Request for Designation of
Market Center
Issued May 22, 1995.
On May 23, 1994, the City of Hamilton, Ohio (Hamilton) filed a
Request to Designate Lebanon, Ohio a Market Center and to require
Tariff Changes. The City of Hamilton,\1\ a municipal gas system located
in Butler County, Ohio, serves approximately 23,000 residential,
commercial, and industrial customers. Hamilton is located approximately
16 miles from Lebanon, Ohio. Within a 20-mile radius of Lebanon, five
interstate pipelines interconnect.\2\
\1\Hamilton states that it is directly connected to two
interstate pipeline systems, Texas Gas Transmission Corporation
(Texas Gas) and Texas Eastern Transmission Corporation (Texas
Eastern), and has contracted for substantial storage capacity on ANR
Pipeline Company (ANR); these three pipelines interconnect in the
area of Lebanon, Ohio.
\2\Hamilton states that: (1) these pipelines are ANR, Columbia
Gas Transmission Corporation, CNG Transmission Corporation, Texas
Eastern, and Texas Gas; (2) Panhandle Eastern Pipe Line Company also
delivers gas to Lebanon through facilities owned by Texas Eastern
and ANR (``the Lebanon Lateral''); (3) all major producing areas,
including Canada, are accessible through at least one of these
pipelines; (4) several storage areas are accessible to the Lebanon
area.
---------------------------------------------------------------------------
Hamilton requests that the Commission issue a policy statement
designating Lebanon, Ohio as a market center and requiring changes to
the tariffs of the interstate pipelines which connect in the Lebanon
Market Center. Hamilton asserts that certain tariff provisions
currently impede the development of an efficient market center at
Lebanon. Hamilton contends that use of a policy statement in this case
is consistent with continued implementation of the Commission's mandate
in Order No. 636\3\ for pipelines to remove impediments to the
development of market centers.
\3\Pipeline Service Obligations and Revisions to Regulations
Governing Self-Implementing Transportation; and Regulation of
Natural Gas Pipelines After Partial Wellhead Decontrol, 57 Fed. Reg.
13,267 (April 16, 1992), III FERC Stats. & Regs. Preambles
para.30,939 (April 8, 1992); order on reh'g, Order No. 636-A, 57
Fed. Reg. 36,128 (August 12, 1992, III Stats. & Regs. Preambles
para.30,950 (August 3, 1992); order on reh'g, Order No. 636-B, 57
Fed. Reg. 57,911 (December 8, 1992), 61 FERC para.61,272 (November
27, 1992) appeal redocketed sub nom., Atlanta Gas Light Company and
Chattanooga Gas Company, et al. v. FERC, No. 94-1171 (D.C. Cir. (May
27, 1994).
---------------------------------------------------------------------------
Discussion
We agree with the City of Hamilton that market centers should be
encouraged to develop and allowed to operate so that both the industry
and consumers of natural gas will benefit. The Commission has made
clear its intent that market centers should develop and that rate
structures not inhibit market centers. Consistent with the basic
operational characteristics of the market, Order no. 636 states the
Commission's belief that market centers should develop naturally and
that the Commission should not designate market centers.\4\ Market
centers have developed since Order No. 636 without the Commission
designating locations as market centers.
\4\The Commission stated that it was adopting Order No. 636
in order to facilitate the meeting of gas purchasers and gas
sellers in a national gas market. Market centers may, in certain
areas, create additional meeting places for gas purchasers and gas
sellers. These inter-pipeline market centers would allow gas from
production areas attached to different pipelines to meet where the
pipelines intersect to create a market for gas purchasers from
different market areas. The Commission believes that market centers
should develop naturally and, therefore, will not mandate market
centers. However, as stated above, the Commission is requiring in
new Sections 284.8(b)(5) and 284.9(b)(5) that there must be nothing
in a pipeline's tariff that inhibits the development of market
centers. (Order No. 636, para.30,939 at 30,427-28. Emphasis added;
footnote omitted.)
The Commission provided specific examples of rate structures
that may inhibit market centers. In various restructuring
proceedings, the Commission provided examples of those rate
structures which may impede the development of market centers. See
Transcontinental Gas Pipe Line Corporation, 63 FERC para.61,194 at
62,501 (1993), and Arkla Energy Resources Company, 62 FERC
para.61,076 at 61,461 (1993).
---------------------------------------------------------------------------
Hamilton specifies some of its concerns regarding the efficiency of
the running of a market center at Lebanon and expresses concerns about
the consideration of other issues in individual proceedings. There is
more to be considered here than economy of administrative effort,
however. The Commission's policy that market centers should evolve
naturally does not compromise Hamilton's interests. Hamilton has raised
and may raise tariff and rate issues in particular pipelines'
individual rate cases.\5\ Discussion among the pipelines to better
coordinate their operations is also encouraged.
\5\In Texas Eastern Transmission Corporation's (Texas Eastern)
one year restructuring report, Hamilton State that Texas Eastern's
backhaul service was merely a transfer of gas within a market center
and that a rate reduction was appropriate. Citing the Commission's
earlier order on restructuring, the Commission said that:
The Commission continues to believe, as it previously advised
Hamilton, that the appropriate place to discuss the maximum rate for
backhaul services is in Texas Eastern's next rate case proceeding.
69 FERC para.61,362, 62,370 (1994).
---------------------------------------------------------------------------
For these reasons, the Commission sees no reason to change its
policy now. The market is better able than the Commission to determine
where market centers should be located. As we have already stated,
unless a market center proposal or specific rate and tariff terms
violate the Commission's rules and regulations, the Commission is
unlikely to intrude on the natural process of development of a market
center. Accordingly, the Commission will not designate Lebanon a market
center and Hamilton's request that the Commission generally review
pipeline operations and tariffs is denied.
The Commission orders
The request for designation of Lebanon, Ohio as a market center and
for a general review of pipeline tariffs and operations is denied.
By the Commission.
Linwood A. Watson, Jr.,
Acting Secretary.
[FR Doc. 95-12989 Filed 5-25-95; 8:45 am]
BILLING CODE 6717-01-M