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Transco, Paiute Pipeline seek approval for higher rates to match project costs

Transcontinental Gas Pipe Line Co. LLC asked the Federal Energy Regulatory Commission to approve increased rates for a natural gas expansion project that would feed two LNG export facilities with a total of 475,000 Dth/d of incremental transportation capacity. In a separate letter, Paiute Pipeline Co. asked for approval of new rates for its own gas expansion project in western Nevada.

Transco, a Williams Cos. Inc. unit, submitted a Sept. 7 application for an amendment to the Natural Gas Act certificate for its Gulf Connector expansion, asking FERC to authorize an increase in the project's initial recourse rate for firm gas transportation service. According to the application, the incremental daily reservation rate would go from about 19.6 cents/Dth to more than 20.6 cents/Dth. Transco proposed the increase in response to an estimated rise in the project's cost, up by $20.1 million to about $187.5 million, and the elimination of bonus tax depreciation in U.S. federal tax law that became effective Jan. 1.

FERC issued a certificate order Nov. 21, 2017, and approved construction of Gulf Connector on Jan. 10. The project will allow Transco to deliver gas for project customers Osaka Gas Trading and Export LLC, a customer of the Freeport LNG export terminal, and Cheniere Energy Inc.'s Corpus Christi Liquefaction LLC, developer of the Corpus Christi LNG export terminal.

The project was designed to be built in two phases, with the first scheduled to start delivering supplies by Sept. 1 and full delivery capacity coming online by Jan. 1, 2019. However, in the Sept. 7 letter, Transco asked FERC to approve only the second in-service date after Osaka, which has committed to 75,000 Dth/d of capacity, said it no longer requires service prior to January.

FERC approval by Nov. 1 would allow Transco time to submit paperwork for the new rates before the project's in-service date, the company said. (FERC docket CP16-494)

Paiute Pipeline made a similar request to FERC to increase rates for its 2018 expansion project. The developer cited increases in capital costs, administrative and general expenses, and operating and maintenance expenses. Paiute originally estimated the project cost to be about $17.9 million, but the company said the cost rose to about $22.3 million.

"The proposed cost updates will increase the project's initial rate from the compliance rate of $41.0537 to $50.5056 per Dth" per month, the company said in its Sept. 7 letter.

FERC authorized the project in a May 15 certificate order and granted Paiute permission Aug. 29 to begin construction of the last stage. The completed project will provide 4,604 Dth/d of incremental capacity from an interconnection with Tuscarora Gas Transmission Co. and will shift 1,031 Dth/d of existing delivery capacity downstream on Paiute's South Tahoe lateral. (FERC docket CP17-471)