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Michigan Defers Approval of Antibypass Contract

Fortnightly Magazine - April 15 1995

The Michigan Public Service Commission (PSC) has rejected a request for expedited approval of a special contract between Consumers Power Co. and a natural gas transportation customer, the James River Corp. Consumers Power negotiated the contract when it learned that James River could bypass the local gas distribution system through a direct connection with a nearby pipeline operated by Panhandle Eastern Pipe Line Corp. The utility claimed that James River could rescind the contract and arrange for bypass service if approval was not obtained by February 3, 1995. The PSC found further study necessary, noting that although the utility claimed the contract would cover short-term variable costs, the proposal called for unprecedented discounts and waivers of surcharges that signaled a possible change in the way gas transportation contracts are negotiated in the state. Re Consumers Power Co., Case No. U-10651, Jan. 17, 1995 (Mich.P.S.C.).

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