Opinion ID: 721438
Heading Depth: 3
Heading Rank: 3

Heading: Capacity retention by transportation-only pipelines

Text: 54 A central part of the Commission's unbundling program is the requirement [319 U.S.App.D.C. 73] that all pipelines assign to their firm-transportation customers the firm-transportation capacity that the pipelines held on upstream pipelines. 18 C.F.R. § 284.242. Now that customers can buy gas directly from the producers, they may bear the responsibility of reserving capacity both on upstream and downstream pipelines. 36 If the downstream pipeline were allowed to retain the capacity on the upstream pipeline, the Commission reasoned, it would inhibit the formation of a competitive gas-sales market by preventing downstream customers from gaining access to the new opportunity to purchase gas directly from the producers. Order No. 636, p 30,939, at 30,417-18. 55 Two pipeline petitioners, ANR Pipeline Company and Colorado Interstate Pipeline Company, urge the Commission to carve out an exception for transportation-only pipelines--pipelines that do not offer any gas sales. For example, a downstream pipeline may wish to offer a customer a package of firm-transportation capacity on its pipeline as well as on a connecting upstream pipeline; the customer may well prefer not to have to contract separately with the upstream pipeline. 56 This petition for review has been rendered moot by an intervening declaratory order. In Texas Eastern Transmission Corp., 74 F.E.R.C. p 61,074, at 61,220 (1996), reh'g pending, Docket No. CP 95-218, the Commission declared that the successful completion of unbundling under Order No. 636, with the separation of pipelines' merchant and transportation functions, had alleviated the Commission's former concerns that pipelines would obstruct access to production areas to favor their merchant functions. Accordingly, the Commission announced that it would decide whether to allow pipelines to acquire upstream or downstream capacity on a case-by-case basis. Id. The Commission's intervening action appears to have provided the pipeline petitioners with the relief that they had sought; any further relief is available in review of the declaratory-order proceeding. 57