MORGANTOWN – In mid-January, Hope Gas offered the Public Service Commission a partial solution to its proposal to abandon its Red Line and convert about 479 customers to propane or electricity. It announced an arrangement with Diversified Midstream for Diversified to acquire the Red Lines.
But now, the Producers Issues Committee of the Gas & Oil Association of WV (GO-WV) opposes the proposal and is asking the PSC to deny it. “That is a patently wrong and unworkable procedural proposal which the Commission should promptly deny,” GO-WV told the PSC.
Hope originally proposed to abandon in place or transfer to other companies about 1,069 miles of the Red Lines, which it previously acquired from Equitrans and Dominion Gathering, that it deems no longer necessary or useful and where existing service “is either unsafe, unreliable, uneconomical, or any combination of the three.”
Under the amended proposal based on the mid-January agreement, the Red Lines would not be decommissioned. “As a result, producers will retain the ability to transport their gas on these lines and royalty owners will continue to see the benefits of their arrangements with producers.”
The proposal would not change Hope’s plan to potentially convert approximately 479 customers to propane (or electricity).
The GO-WV committee offered several objections. One, Hope is seeking a PSC order by March 1, and that’s too hasty. Diversified produces 32% of the gas that flows through the lines, but hundreds of other producers provide the other 68% – and not all are GO-WV members – and Hope must give them written notice so they can prepare.
“There could be better solutions to many of the issues in this case and producers, who want to stay in business, would like a realistic opportunity to explore those issues,” the committee said.
Two, under the proposal, the transferred lines would not be regulated by the PSC, which would allow the producers no recourse if Diversified would later elect to abandon the lines.
Three, the committee said, Diversified operates only 44% of the production meters along the lines. “What is Diversified’s interest in continuing to operate Red Lines over which its production does not flow?”
Four, Hope is keeping the agreement terms confidential. Other producers may have wanted the option to agree to the same terms. “Why is it in the public interest for Hope to favor one producer over all others?”
(On that point, Hope told the PSC in mid-January, that it reached out to a number of producers, but only Diversified “sincerely engaged” in discussions.)
Five, the committee said, gas flowing through the Red Lines eventually reaches other Hope lines it also acquired and plans to keep active. That means producers who use the Red Lines could be subject to two transportation charges – from Diversified and Hope.
The committee proposes that Hope should be required to wrap its proposals regarding transferring its Red Lines and converting customers along those lines into its next base rate case – and offering two alternative rates: one if Hope keeps the lines and one if Hope transfers them. And a pilot project proposed by PSC staff should be adopted.
“And the commission should issue a final order on all issues before it in all three cases at the same time,” the committee concluded.
