Note:  See gas quality section at the bottom that they propose adding on 
their other pipelines, like they have
on NGPL.

Shippers Protest KMI's Order 637 Tariff Changes

Kinder Morgan Interstate Gas Transmission (KMI) has attempted an end run 
around FERC's Order 637,
filing wide-ranging operational and rate changes early under expedited tariff 
procedures to avoid the
more rigorous review in store for compliance filings, according to customer 
protests. 

Items in KMI's tariff filing fall into no less than 13 general categories, 
Indicated Shippers said. They include
imbalance provisions, storage balances, small customer service, gas quality, 
point allocations, curtailment 
priorities, right of first refusal, scheduling priorities, incidental 
purchase and sale, capacity release,
unauthorized gas, capacity rights overrun charge, and miscellaneous. 

Indicated Shippers called for summary rejection or maximum suspension of 
KMI's June 5 tariff filing (RP00-316), 
saying "most of the changes proposed in this case represent an effort by KMI 
to implement elements of 
Order 637 selectively and in a manner designed to minimize the opportunity 
for meaningful review and 
comment by KMI's customers." Only 12 days are allowed for intervention and 
comment on usually routine 
tariff filings, while the Federal Energy Regulatory Commission has allotted 
30 days for comments on 
Order 637 compliance filings. KMI was among the group of pipelines slated to 
make compliance filings June 15. 

KMI said its filing did not constitute its compliance filing, but was aimed 
at changing its tariff to reflect "the 
current natural gas business climate and evolving business practices.." It 
did acknowledge, "A number of the 
changes proposed herein are consistent with and advance the Commission's 
goals in Order No. 637." 

Indicated Shippers also protested changes that would make decisions regarding 
negative storage imbalances 
and end of season inventory swaps a matter of KMI's discretion without any 
standards on how those decisions 
would be made. The shippers also protested changes to the default methodology 
for point allocations for billing 
purposes, and the injection of KMI discretion into the formula for accepting 
or rejecting predetermined allocation 
agreements with upstream or downstream parties. In addition curtailment 
provisions filed by KMI appear to be 
contrary to Order 637-A's mandate that shippers moving gas within the primary 
path should have primary rights. 

The filing also would give the pipeline the opportunity to bottle up 
significant quantities of coal bed methane gas 
in Wyoming's Powder River Basin by imposing more rigorous standards on 
nitrogen content, according to 
Western Gas Resources. A key change would impose a nitrogen gas quality 
specification of 3% by volume. 
While KMI states the change is necessary to accommodate transfers with 
interconnecting pipelines, six of the 
seven connecting pipelines identified have no nitrogen specifications. Only 
KMI's affiliate, Natural Gas
Pipeline Co. of America, has similar rules, Western Gas said. 

"KMI's proposed nitrogen specification would enable KMI to refuse to accept 
coal bed methane production for 
transportation, thereby foreclosing the availability of one of the principal 
means of downstream pipeline egress 
out of Powder River production areas," Western Gas added. Producers would 
have to shut in production while 
they construct costly nitrogen facilities. This could "create at least a 
temporary gap in the downstream 
movement of coal bed supplies to mid-continent and eastern markets, thus 
frustrating consumer access to 
these significant supplies." 


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