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Algonquin Gas Transmission, LLC HubLine/East to West Project - Fuel Overview of Fuel changes.

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Presentation on theme: "Algonquin Gas Transmission, LLC HubLine/East to West Project - Fuel Overview of Fuel changes."— Presentation transcript:

1 Algonquin Gas Transmission, LLC HubLine/East to West Project - Fuel Overview of Fuel changes

2 Background Background: On June 28, 2008, as amended on June 19, 2009 and June 24, 2009, Algonquin filed an application in Docket Nos. CP , et al. to construct and operate the HubLine/East to West Project (“E2W Project”). In addition to other facility modifications, Algonquin proposed in this application to make piping modifications at the Hanover Compressor Station in Morris County, New Jersey to permit reverse flow of gas and backhaul capability along Algonquin’s entire mainline. On January 5, 2010, the Commission issued its “ Order Granting Abandonment and Issuing Certificate ” for the E2W Project. 1 The January 5 Order stated that –Because the actual flow of gas on certain parts of Algonquin’s mainline will at times be west to east and at other times east to west after completion of the Amended E2W Project, the contractual direction of movement will not be opposite to the actual flow of gas at all times and at all points along the contractual path. Therefore, to the extent that transactions under contracts that previously would have been defined as backhauls pursuant to Algonquin’s tariff no longer meet the definition for backhaul, those transactions will be subject to fuel charges pursuant to the fuel reimbursement provisions of Algonquin’s tariff. 2 With the commencement of service on the E2W Project, significant portions of the Algonquin system on which gas had flowed in only one direction will now be bi-directional, i.e., capable of flowing natural gas in both directions. As discussed above, certain transactions may no longer be backhauls as a result of changes in system flow direction; these transactions would now be subject to the applicable fuel charges under the currently effective tariff. 1 Algonquin Gas Transmission, LLC, 130 FERC ¶ 61,011 (2010) (“January 5 Order”). 2 Id. at P 40. 2

3 Changes Changes Effective on November 1, 2010 (Project In-Service Date): General Rule. As set forth more fully below, applicable fuel will be charged on –(i) all nominations that traverse the bi-directional sections of the system, with the exception of the HubLine facilities, and –(ii) all forward haul nominations on non bi-directional sections under non-AFT-CL rate schedules (with no fuel assessed on these sections for backhaul nominations under non AFT-CL rate schedules or any nominations under AFT-CL rate schedules). Bi-directional Sections of System. The following sections of the system will be designated as bi- directional in LINK® and fuel charges will be assessed on any nomination traversing these sections: –Traditional Mainline – Lambertville to intersection of 24” mainline and Q-1 system; –24” mainline to J system and J system to DOMAC; –Q-1 system to HubLine; and –I-1 system. –[Note: HubLine will also be designated as bi-directional in LINK® but is exempt from fuel as discussed in the following slide.] 3

4 Changes Non Bi-directional Sections of the System. All other sections of the system will be designated as non bi- directional sections in LINK® and appropriate fuel charges will be assessed according to nomination flow direction and rate schedule as set forth below. –Algonquin currently is not charging fuel on nominations on non bi-directional sections of the system under Rate Schedule AFT-CL, regardless of flow direction. – Delivery Laterals (Nomination under non AFT-CL Rate Schedule). Nominations wholly on lateral(s) flowing towards the mainline will be backhaul. Nominations wholly on lateral(s) flowing away from mainline will be forward haul. – Supply Lateral (Nomination under non AFT-CL Rate Schedule). Nominations wholly on lateral flowing towards the mainline will be forward haul and nominations wholly on lateral flowing away from mainline will be backhaul. [Note: Currently, NE Gateway is the only supply lateral and it is a closed AFT-CL, therefore, non AFT-CL rate schedules may not nominate on it.] HubLine Exemption. Existing HubLine fuel exemption remains in place (Section 32.1 of the GT&C). –Nominations with receipts and deliveries wholly on HubLine, regardless of flow direction, will not pay fuel. –Nominations for transportation of gas from HubLine to any point outside of HubLine on the Algonquin system, or from any point outside of HubLine onto HubLine, will be charged applicable fuel. 4

5 Changes Nominations under Open Access Rate Schedules. Contracts under the mainline open access rate schedules (AFT-1, AFT-E, AFT-1S, AFT-ES & AIT-1) will maintain the ability to nominate on a bi- directional basis, i.e., both “forward hauls” and “backhauls,” although any movement that was a backhaul on the mainline prior to the change in system flow direction will now be charged applicable fuel as described above. Tariff. No changes to the tariff are required for the commencement of service on the E2W Project. Anticipated Fuel Savings. As discussed in the E2W Project application, “the reverse flow at the Hanover Compressor Station … is expected to result in fuel savings for existing customers.” 3 The level of anticipated fuel savings, which is dependent upon the actual level of reversed flow on the Algonquin system following the in-service date of the E2W Project, will be addressed in more detail in the upcoming FRQ filing. 3 See January 5 Order at P 5. 5

6 Fuel Processing Flow 6 This diagram reflects general fuel processing logic and may not be reflective of specific rate schedule rules. Does nomination traverse mainline section of pipe? Is nomination moving on HubLine only? Applicable rate schedule fuel Fuel Exemption Is nomination moving away from the mainline? Is segment a delivery lateral? Nomination is a forward haul; Applicable rate schedule fuel Nomination is a back haul; Fuel exemption Nomination is a back haul; Fuel exception Nomination is a forward haul; Applicable rate schedule fuel Yes No

7 80035 LINK® Map – Revised Bi-Directional Mainline 7 This map reflects new bi-directional mainline of Algonquin where nominations will be assessed fuel on forward or backhaul movements. Orange shading indicates the new mainline, while purple indicates HubLine Lambertville Canton Domac I Beld Fore River Beverly NE Gateway Q-1 Extension G System Traditional Mainline Q-1 to HubLine HubLine Needham Regulator J Mainline 24” Mainline I-1 Mainline

8 LINK® – Fuel Examples 8 This slide demonstrates fuel assessments on an AFT-1 contract on the new Algonquin mainline and associated open laterals. Green arrows indicate fuel assessment while red arrows indicate no fuel assessment. D = Delivery Lateral D D D D D


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