[Federal Register Volume 64, Number 52 (Thursday, March 18, 1999)]
[Notices]
[Pages 13418-13419]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6559]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission
[Docket No. CP99-238-000]


Granite State Gas Transmission, Inc.; Notice of Petition for A 
Declaratory Order

March 12, 1999.
    Take notice that on March 5, 1999, Granite State Gas Transmission, 
Inc. (Granite State), 300 Friberg Parkway, Westborough, Massachusetts 
01581, filed a Petition for Declaratory Order (Petition) pursuant to 
Rule 207(a)(2) of the Commission's Rules of Practice and Procedure (18 
CFR 385.207(a)(2)) requesting the Commission to confirm that Granite 
State may charge its local distribution company affiliate, Northern 
Utilities, Inc. (Northern Utilities), a contractually authorized exit 
fee. This fee would be in consideration for releasing Northern 
Utilities from its contractual obligation for a liquefied natural gas 
(LNG) storage and vaporization service which would be provided by 
Granite State's proposed LNG facility in Wells, Maine, all as more 
fully set forth in the Petition which is on file with the Commission 
and open to public inspection. This filing may be viewed at http://
www.ferc.fed.us/online/rims.htm. (Call (202) 208-222 for assistance.)
    Granite State says that it received a certificate of public 
convenience and necessity (certificate) in Docket No. CP96-610-000 on 
May 27, 1998 (83 FERC Sec. 61,194), to construct and operate a 2 Bcf 
LNG storage and vaporization facility in Wells, Maine (Wells) which was 
designed to provide peaking gas deliveries exclusively for Northern 
Utilities' distribution systems in Maine and New Hampshire for a 20-
year term. Granite State asserts that it undertook the LNG project in 
accordance with a Precedent Agreement (Agreement) with Northern 
Utilities to which had attached a LNG Storage Contract (Contract) that 
Northern Utilities was obligated to execute after Granite State 
received the certificate. According to Granite State, the Maine and New 
Hampshire Public Utilities Commissions (PUCs) had approved Northern 
Utilities' plans to acquire peaking gas supplies from the

[[Page 13419]]

LNG facilities pursuant to the provisions of the Agreement and 
Contract, and that the PUCs supported Granite State's application in 
Docket No. CP96-610-000.
    Granite State further states that prior to the issuance of the 
certificate, Northern Utilities surveyed potential alternate suppliers 
for sources of peaking gas deliveries and the proposals it received 
were less advantageous than the Granite State LNG peaking service on 
the basis of cost, supply security, contract flexibility and supplier 
viability. Granite State says that after it accepted the certificate, 
Northern Utilities conducted another survey for potential alternate 
suppliers of peaking gas service. According to Granite State, Northern 
Utilities had made commitments to the state regulatory commissions that 
it would undertake further solicitations from alternate peaking 
suppliers after the certificate was issued.
    Granite State says that Northern Utilities' post-certificate 
solicitations for peaking service from other potential suppliers and 
sources resulted in proposals for pipeline deliveries by marketers 
having capacity on the joint pipeline facilities owned and operated by 
Portland Natural Gas Transmission Systems (PNGTS) and Maritimes & 
Northeast Pipeline LLC (Maritimes) which, on a cost basis, were more 
advantageous than the projected cost of the Granite State LNG service. 
Granite State also says that Northern Utilities negotiated two 
contracts with Distrigas of Massachusetts Corporation (DOMAC) for 
supplemental LNG, delivered either in the form of vapor or by tanker 
truck to Northern Utilities' markets. According to Granite State, 
Northern Utilities concluded that the combination of the post-
certificate proposals for pipeline deliveries of peak shaving supplies 
and the supplemental LNG supplied by the two DOMAC contracts would 
provide an alternative to the granite State LNG storage and 
vaporization service that would better meet Northern Utilities' cost 
and non-cost requirements for peaking services.
    Granite State requests the Commission in this Petition to confirm 
that Granite State may charge Northern Utilities an exit fee for 
releasing Northern Utilities from the Contract. This fee will recover 
the costs of land purchases, facilities engineering, environmental 
engineering, non-engineering consulting, legal representation, 
allowance for funds used during construction (AFUDC) and the 
Commission's outside environmental contractors totaling $11,589,138 
which will be amortized over a 10-year period with carrying costs. 
These costs are estimated through May 31, 1999. The exit fee will be 
based on actual costs.
    Granite State asserts that the alternatives to peak shaving service 
provided by the Granite State LNG facility were so much more 
advantageous to Northern Utilities' customers that Northern Utilities 
requested to be released from its obligation to execute the Contract, 
acknowledging that the Contract obligated that Northern Utilities to 
reimburse Granite State for the costs it incurred with respect to the 
Wells LNG project and in obtaining the various regulatory approvals, 
including the Certificate.
    Granite State further says that Northern Utilities has advised 
Granite State that the cost savings accruing to its customers from the 
alternate peak shaving supplies and contracts for supplemental LNG will 
amount to approximately $17-18 million over a ten-year period on a net 
present value basis, after reimbursing Granite State for $11.6 million 
over the same period.
    Granite State says that NO TANKS, INC. (NO TANKS), a citizens group 
opposed to the location of the LNG facility in Wells, has petitioned 
the U.S. Circuit Court for the D.C. Circuit to review the Commission's 
order issuing the Certificate. Granite State and NO TANKS have agreed 
to a settlement, contingent upon Commission approval of Granite State's 
Petition. Granite State further says that in the settlement, NO TANKS 
agrees to support Granite State's Petition request and also to withdraw 
its appeal, and granite State agrees to forego the project in its 
entirety if the Commission acts favorably on this Petition by June 1, 
1999.
    Any person desiring to be heard or to make any protest with 
reference to said Petition should on or before April 2, 1999, file with 
the Federal Energy Regulatory Commission, Washington, D.C. 20426, a 
motion to intervene or a protest in accordance with the requirements of 
the Commission's Rules of Practice and Procedure (18 CFR 385.211 or 
385.214) and the regulations under the Natural Gas Act (18 CFR 157.10). 
All protests filed with the Commission will be considered by it in 
determining the appropriate action to be taken but will not serve to 
make the protestants parties to the proceeding. Any person wishing to 
become a party in any proceeding herein must file a motion to intervene 
in accordance with the Commission's rules.
Linwood A. Watson, Jr.,
Acting Secretary.
[FR Doc. 99-6559 Filed 3-17-99; 8:45 am]
BILLING CODE 6717-01-M