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Arizona Extends Plan to Share LDC Pipeline Capcity

Fortnightly Magazine - November 15 1996

The Arizona Corporation Commission has extended its interim approval of the "Interstate Pipeline Capacity Sharing Program" implemented by Southwest Gas Corp.

The plan allows the gas utility to buy gas on the spot market from areas outside the area served by its traditional pipeline supplier, El Paso Natural Gas Co., and then transport the gas using pipeline capacity held by El Paso's other operating divisions in Nevada and California. The utility then credits the contributing pipeline division with one-half of the commodity-cost savings as compensation.

The commission noted that the program benefits Arizona consumers if the price of gas delivered to the outside pipeline is moderately lower than the price for gas delivered to El Paso. Should the price difference increase, however, the share of savings collected by the contributing pipeline division could exceed the market value of substitute capacity, the commission warned. Re SW Gas Corp., Dkt. No. U-1551-95-084, Decision No. 59757, July 17, 1997 (Ariz.C.C.).

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