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States Expand Gas Transportation Programs

Fortnightly Magazine - March 15 1997

Regulators in Michigan and Florida have taken steps to expand programs for transportation of customer-owned gas.

In Michigan, the state public service commission will test the idea of expanding transportation service to residential and commercial users for two gas distribution utilities, plus allowing some aggregation to meet volume requirements. In Florida, the PSC will explore the idea of aggregating facilities owned by different customers.

Michigan. Tests in Michigan will involve Michigan Consolidated Gas Co. and Consumers Power Co. The MCG pilot, for example, would allow 47,0000 customers in the Grand Rapids, Mich., area the option of purchasing their gas from third-party suppliers. To participate, customers must agree to take service under the pilot transportation service tariff for a minimum of one year. Suppliers who participate in the program must accept, at maximum tariff rates, a pro-rata share of MCG's released upstream capacity on the ANR Pipeline Co. system. The program also allows sellers of gas supplies to enter into aggregation agreements with MCG to facilitate the sales of smaller amounts of gas to individual customers.

The commission cautioned, when approving the proposed program, that mandatory capacity release requirements can sometimes create an unwarranted windfall for sales customers and a barrier to third-party participation. Nevertheless, because the LDC proposes to release only that capacity for which it actually pays maximum rates, such an unacceptable result "will likely be avoided," the commission concluded. Re Michigan Consolidated Gas Co., Case No. U-11273, Dec. 20, 1996 (Mi.P.S.C.); Re Consumers Power Co., Case No. U-11249, Dec. 20, 1996 (Mi.P.S.C.).

Florida. In Florida, the PSC has authorized Peoples Gas System Inc., to expand its current experiment for aggregating customers to qualify for transportation service. This move modified authority granted late last year that allowed Peoples Gas to offer transportation service to customers using more than 500,000 therms of gas per year at multiple delivery points, so long as the facilities served were directly owned and operated in the name of a single customer.

Under the expanded experiment, Peoples Gas will implement a Firm Transportation Aggregation Rider that is similar to the original offering except without the ownership restrictions. Under both rate schedules, customers are charged the otherwise applicable rate for sales service less the purchased-gas adjustment charge.

The purpose of the new aggregation rider is to determine whether it is possible to provide simplified transportation service to customers currently taking service under firm rate schedules. Suppliers and marketers wishing to aggregate customers under the new tariff must sign an agreement governing the resolution of delivery imbalances directly with the LDC. Re Peoples Gas System Inc., Docket No. 961236-GU, Order No. PSC-96-1515-FOF-GU, Dec. 13, 1996 (Fla.P.S.C.).

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