PHMSA Considering Additional Pipeline Safety Changes

March 2012, Vol. 67 No. 3

Gulf South says daily allocations will force shippers to pay for the gas they use. "The tariff does not contain any daily overrun penalties, and Gulf South is not proposing any here. For monthly balancing, the sum of the daily allocations under each service agreement will establish the net imbalance position for each customer for the month," says J. Kyle Stephens, vice president, Regulatory Affairs and Rates, Gulf South. "This proposal is consistent with the industry standard for daily allocations, as well as the Commission’s finding that daily allocations will more accurately accommodate the current marketplace."

If FERC grants Gulf South's request, shippers such as Devon, BP and Atmos run the risk of having to pay the existing overrun rate for the use of capacity in excess of its firm capacity rights on any day.

Understandably, Gulf South customers are unhappy about suddenly having to pay overrun rates, which are more likely to affect utilities like Atmos which have to be able to buy more than their daily allocation when weather on a given day takes a sudden turn for the worse, be it extra hot or extra cold.

Mary E. Nelson, manager, Regulatory Affairs, Devon Energy Corporation, said "there is simply no way to manage deliveries to avoid daily overrun charges when the delivery point goes directly to the user," she says.