Texas Gas MAR 4 2015 TVA Pipeline App.Pdf
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UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION ) Texas Gas Transmission, LLC ) Docket No. CP15-____-000 ) ABBREVIATED APPLICATION OF TEXAS GAS TRANSMISSION, LLC FOR AUTHORIZATION TO CONSTRUCT AND OPERATE PIPELINE FACILITIES Pursuant to Section 7(c) of the Natural Gas Act (“NGA”), 15 U.S.C. § 717f(c) (2012), and Section 157.7 of the Regulations of the Federal Energy Regulatory Commission (“Commission”), 18 C.F.R. § 157.7 (2014), Texas Gas Transmission, LLC (“Texas Gas”) submits this abbreviated application for issuance of a certificate of public convenience and necessity for authorization to construct, own, operate, and maintain a new natural gas pipeline lateral consisting of approximately 22.5-miles of 24-inch diameter pipe, a meter and regulator station, and appurtenant auxiliary facilities, extending from Texas Gas’ Midland 3 Compressor Station to an interconnection with Tennessee Valley Authority’s (“TVA”) proposed combined-cycle natural gas-fired power plant located west of the town of Paradise, Muhlenberg County, Kentucky (“Western Kentucky Lateral” or “Project”). The Project will provide a design capacity of up to 230,000 million British thermal units per day (“MMBtu/d”) of firm natural gas transportation capacity. The Project will serve TVA’s Paradise Fossil Plant (“Paradise Plant”). Texas Gas’ Project is required by the present and future public convenience and necessity. Texas Gas requests issuance of an order granting a certificate of public convenience and necessity for the Project by December 2015, to allow Texas Gas to begin full construction by January 2016, and place the Project facilities in service to meet TVA’s initial operation date, of September 2, 2016, for test gas service. Achieving this in-service date is critical due to the contractual agreement with TVA and for TVA complying with the Environmental Protection Agency’s (“EPA”) Mercury and Air Toxics Standards (MATS). In support of this Application, Texas Gas submits the following information: I. APPLICANT The exact legal name of the applicant is Texas Gas Transmission, LLC, and its principal place of business is 9 Greenway Plaza, Suite 2800, Houston, Texas 77046. Texas Gas is a limited liability company organized and existing under the laws of the State of Delaware. Texas Gas is engaged in the business of transporting natural gas in interstate commerce, and is a “natural-gas company” as defined by Section 2(6) of the NGA.1 Texas Gas is authorized to do business in the States of Texas, Louisiana, Arkansas, Mississippi, Tennessee, Kentucky, Indiana, Illinois, and Ohio. 1 15 U.SC § 717a(6). 2 The name, title, mailing address, telephone, and e-mail addresses of those persons to whom correspondence and communications concerning this Application should be directed are as follows: Michael E. McMahon A. Gregory Junge Sr. Vice President and General Counsel Michael R. Pincus J. Kyle Stephens Van Ness Feldman, LLP Vice President, Regulatory Affairs & Rates 1050 Thomas Jefferson St., NW M. L. Gutierrez Seventh Floor Director, Regulatory Affairs Washington, DC 20007 Texas Gas Transmission, LLC Phone: (202) 298-1800 9 Greenway Plaza, Suite 2800 Fax: (202) 338-2361 Houston, TX 77046 [email protected] Tel: (713) 479-8059 [email protected] Fax: (866) 459-7336 [email protected] [email protected] [email protected] Each of the identified persons is designated to receive service in accordance with 18 C.F.R. § 385.203(b)(3). Texas Gas requests the Commission to place these persons on the official service list for this proceeding, pursuant to 18 C.F.R. § 385.2010. Texas Gas requests that the Commission waive Rule 203(b)(3) to allow designated service to each of these persons. II. BACKGROUND Texas Gas designed the proposed Western Kentucky Lateral to meet the specific market demand of TVA’s Paradise Plant in Western Kentucky. The need for the proposed Project is demonstrated by the Precedent Agreement executed by TVA that supports the full design capacity of the Project. In November 2013, the TVA Board of Directors approved a resolution to construct and operate a new combined cycle natural gas-fired electric generation plant at 3 the Paradise Plant in Muhlenberg County, Kentucky and retire the existing coal Units 1 and 2 when the natural gas plant is available. TVA is constructing the new natural gas- fired generating plant and replacing its existing coal Units 1 and 2, facilitating TVA’s compliance with the EPA’s MATS. Texas Gas executed a Precedent Agreement with TVA that provides for a design capacity of up to 230,000 MMBtu/d of firm transportation service on the proposed lateral at negotiated rates for delivery to TVA’s Paradise Plant in Muhlenberg County, Kentucky for a primary term of 20 years. Texas Gas designed the Project to provide a design capacity of up to 230,000 MMBtu/d of firm natural gas transportation service to meet TVA’s demonstrated demand for natural gas transportation service. Texas Gas will provide open access, Part 284 transportation service on the Western Kentucky Lateral. Texas Gas submitted, in Docket No. RP15-440-000, on February 6, 2015, an NGA Section 4 proceeding, a proposal to implement new firm and interruptible lateral rate schedules to provide for transportation on customer laterals and Texas Gas proposes to provide service on the Western Kentucky Lateral pursuant to those rate schedules if they are approved (“Lateral Rate Schedule Proposal”).2 III. DESCRIPTION OF FACILITIES Texas Gas proposes to construct, own, operate, and maintain a natural gas pipeline lateral consisting of approximately 22.5-miles of 24-inch diameter pipe, a meter 2 Texas Gas’s proposal includes the addition of new Rate Schedules FLS (Firm Lateral Service) and ILS (Interruptible Lateral Service) to Sections 5.20 and 5.21 of its Tariff, respectively, as well as conforming changes to other portions of its Tariff as necessary to implement the new services. Texas Gas did not propose any rates for FLS and ILS in the Lateral Rate Schedule Proposal but proposed that the initial rates for each market lateral would be established in the applicable certificate proceeding for each lateral project and once approved those rates will be included under the FLS and ILS rate schedules. 4 and regulator station, and appurtenant auxiliary facilities, extending from Texas Gas’ Midland 3 Compressor Station to a proposed interconnection with TVA’s Paradise Plant both located in Muhlenberg County, Kentucky. Texas Gas’ proposed new meter and regulator station at the delivery point to the Paradise Plant is located at Mile Post 22 of the proposed lateral. The general location of the Project is provided in Exhibit F. A detailed description of the proposed facilities to be constructed is included in Exhibit F-I, Environmental Report. The flow diagrams and data which demonstrate the effect of the proposed facilities on the existing operational capabilities and conditions are included in Exhibit G, G-II. The estimated capital costs of the proposed facilities are approximately $81 million as detailed in the attached Exhibit K. The facilities proposed herein will be constructed in compliance with all applicable rules and regulations, and operated in accordance with the applicable federal pipeline safety regulations of the United States Department of Transportation. IV. AUTHORIZATIONS REQUESTED Texas Gas requests authorization to construct, own, operate, and maintain (1) a new natural gas pipeline lateral consisting of approximately 22.5-miles of 24-inch diameter pipe, (2) a new meter and regulator station, and (3) appurtenant auxiliary facilities. The pipeline facilities will extend from Texas Gas’ existing Midland 3 Compressor Station facilities to an interconnection at the proposed TVA Paradise Plant located in Muhlenberg County, Kentucky. In addition, Texas Gas requests authorization to establish an initial NGA Section 7(c) recourse rate for firm and interruptible services using the proposed Western Kentucky Lateral facilities as shown on Exhibit N. 5 V. MARKET NEED AND LATERAL RATE SCHEDULE The Project is fully supported by the binding Precedent Agreement Texas Gas entered into with TVA to transport a total of 230,000 MMBtu/d on the Western Kentucky Lateral. Prior to the Project being placed in service, TVA will execute firm transportation and negotiated rate agreements for the lateral having a primary term of 20 years. TVA has also acquired firm transportation capacity on Texas Gas’ mainline system pursuant to the Open Season held on July 28 through August 1, 2014, and will execute both firm transportation and negotiated rate agreements for that capacity prior to the Project being placed into service. TVA’s firm transportation contract demand under rate schedule FT on Texas Gas’ mainline system from Zone SL to the proposed Western Kentucky Lateral Zone 3 is 160,000 MMBtu/d, as described in Appendix C to the Precedent Agreement. TVA also contracted for 40,000 MMBtu/d for Summer No-Notice service under the SNS rate schedule and 40,000 MMBtu/d of Winter No-Notice service under the WNS rate schedule on Texas Gas’ mainline system for deliveries to the Western Kentucky Lateral in Zone 3, as described in Appendices A and B to the Precedent Agreement. The Precedent Agreement is included in Exhibit I and filed as Privileged and Confidential information in Volume III as part of this Application. Firm and interruptible transportation services for the Western Kentucky Lateral will be provided under new firm and interruptible lateral transportation services pursuant