FERC Allows Anchor Tenants for Alaskan Gas Pipeline

By Published On: February 12, 2005

Getting Alaskan North Slope gas to the lower 48 states?including California?came one step closer February 9, following the Federal Energy Regulatory Commission?s setting of rules governing bidding for capacity on Alaska pipeline projects. In line with FERC?s penchant to name important decisions as ?orders,? Order 2005 will ?promote additional exploration and development of Alaska natural gas,? said commissioner Suedeen Kelly. Regulators are following Congress?s mandate to expedite Alaskan gas processing. The state?s abundant gas could be piped across borders, but at this point it likely will arrive in California on liquefied natural gas tankers. Potential pipeline developers will be able to sign up ?anchor? shippers, which are akin to a shopping mall?s ?anchor tenants,? typically department stores, that provide developers with advance assurance that their projects will have paying customers. FERC also approved the ability of nonanchor shippers to grab space on the pipelines at a later time. Prior to the vote, some companies, including TransCanada, urged the commission to allow this anchor tenant, or ?presubscription,? device to make sure the pipelines are financed. Others, such as Calpine, maintained that open access should allow others to get the same terms as presubscribers. The commission agreed with both positions, ordering that the anchor agreements be made public and that other potential subscribers be allowed to opt for the terms offered the anchors. In addition to creating standards for this ?open season? bidding, the commission allowed gas to be transported from non?Prudhoe Bay sources if the bidding exceeds the initial capacity of a pipeline project. Separate bidding will be used for in-state and out-of-state use. ?The tremendous size, scope and cost of an Alaskan pipeline, the long lead-time needed for such a project, environmental sensitivities, and the competitive conditions that are unique to such a project warrant special consideration and oversight,? said the commission. In other FERC action, the commission will no longer allow electricity sellers with market-based rates to delay reporting on significant events for three years. With market-based rate authority, FERC has to determine whether or not a seller could have market dominance. Before this decision, if a seller bought a power plant or had some other significant change that could affect its market power, it could delay reporting the change until its triennial proceeding. ?Now, if there?s any change in status that could change the field, you have to come in right away,? explained Barbara Conners, FERC spokesperson. She added that the commission did not issue a ?laundry list? of events that could trigger a filing, instead opting for broad outlines.

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