Doesn't change the order, but indicates potential issues on the 2003 Expansion.

NGI's Daily Gas Price Index 
Breaking News : posted Oct 25, 11:12 AM
Breathitt 'Uneasy' About Approach to Pipe Certification 
Although FERC and California regulators have made a lot of headway in past months in their effort to relieve the imbalance between in-state and interstate pipeline capacity, Commissioner Linda Breathitt said Wednesday that she still is somewhat unsettled by FERC's tendency to routinely approve interstate pipe projects without giving full weight to the impact on existing shippers. 
"I remain uneasy about the...policies the Commission has advanced in favor of certification of interstate capacity despite the [inadequacy] of takeaway capacity and particularly the confidence with which the Commission has rejected the legitimate concerns of shippers on [Kern River's] system," she said during the regular FERC meeting. 
Breathitt's remarks were part of a concurring opinion on two orders in which FERC denied rehearing of its certificate approval for Kern River Gas Transmission's 2002 Expansion Project and California Action Project [CP01-31, CP01-106-001]. Firm customers of Kern River sought reconsideration of the certificate orders on the grounds that the expansions would result in pro-rata capacity reductions for existing shippers at Wheeler Ridge and would diminish their firm delivery rights. 
Despite her concerns, Breathitt noted that she was "pleased that over the past six months the Commission has come to acknowledge that our actions in certificating the Kern River expansions could exacerbate the problems of delivering natural gas to end-users in Southern California." 
Even more importantly, "the Commission has recognized the potential degradation of shippers' firm rights resulting from the certification of additional interstate capacity is an appropriate factor in the public benefits analysis that we use to determine whether a project is in the public convenience and necessity," she said. 
Moreover, "I am relieved that certain events are occurring in California that will mitigate congestion at Wheeler Ridge. More takeaway capacity is on the horizon, and the California PUC is considering certain regulatory relief that will facilitate the transportation of natural gas from Wheeler Ridge to Southern California markets." 
Nevertheless, Breathitt urged her FERC colleagues "not [to] lose sight of the panoply of issues we must consider in issuing natural gas pipeline certificates." 
This doesn't mean, however, that she is against all new pipelines and expansion projects, Breathitt said. "I most certainly share the sense of urgency to ensure adequate and reliable energy supplies. However, there is more to the Commission's mandate under the Natural Gas Act than simply getting more pipe in the ground." 
Breathitt noted that the Commission plans to revisit the issue of the adequacy of California takeaway capacity when it takes up Kern River's pending application for its proposed 2003 Expansion Project [CP01-422]. Firm customers on the pipeline have already protested the application. They claim that Kern River has sold nearly 500,000 Dth/d of additional primary firm delivery point capacity at Wheeler Ridge in the three expansion projects, and that they are experiencing scheduling cuts as a result. 
When the Kern River 2003 expansion comes before the Commission, "I will continue to advocate a thoughtful and coordinated approach to fostering badly needed interstate and intrastate expansion in California." 


 -----Original Message-----
From: 	Cantrell, Rebecca W.  
Sent:	Wednesday, October 24, 2001 6:29 PM
To:	Miller, Stephanie; Tycholiz, Barry; Tholt, Jane M.
Cc:	Pharms, Melinda
Subject:	FERC Draft Orders on Kern River and PG&E Projects

FERC today issued Draft Orders denying rehearing in the following:

Kern River, CP01-31 (2002 Expansion Project)
Rejected arguments of the Firm Customers that the project should not have been approved or, alternatively, the rights of the expansion shippers at Wheeler Ridge should be subordinate to those of the existing shippers.

PG&E Gas Transmission, NW, CP01-141 (2001 Expansion)
Rejected Newport Northwest LLC's assertion that requiring the expansion shippers to pay a fuel cost surcharge to recover any incremental fuel costs due to the additional compression approved for this project is contrary to FERC precedent and the policy statement on expansion facilities.

These orders should be issued within the next few days, and we will circulate copies.  Let Melinda know if you want to see the draft copies before then (they are not available electronically).