00-8461. Horizon Pipeline Company, L.L.C.; Notice of Applications for Certificates

March 31, 2000.

Take notice that on March 23, 2000, Horizon Pipeline Company, L.L.C. (Horizon or applicant), 747 E. 22nd Street, Lombard, Illinois 60148—5072, filed applications pursuant to and in accordance with section 7(c) of the Natural Act (NGA). In Docket No. CP00-129-000, Horizon seeks a certificate of public convenience and necessity to construct and operate approximately 28.5 miles of new 36-inch interstate natural gas pipeline and compression facilities, lease 380 MDth per day of firm capacity from Natural Gas Pipeline Company of America (Natural) ^[1] on 42 miles of its existing pipeline, and provide firm compression service for Natural. Further, in Docket No. CP00-130-000, Horizon requests a blanket certificate pursuant to Subpart F of Part 157 of the Commission's Regulations to perform certain routine activities and operations. In addition, in Docket No. CP00-131-000, Horizon seeks a blanket certificate pursuant to Subpart G of Part 284 of the Commission's Regulations to provide open-access transportation of natural gas for others. Horizon also seeks approval of its initial rates and pro forma tariff provisions included in its certificate application, all as more fully set forth in the applications which are on file with the Commission and open to public inspection. This filing may be viewed on the web at http://www.herc.us/​online/​rims.htm (call 202-208-2222).

Horizon is a limited liability company organized and existing under the laws of the State of Delaware. Horizon states that the two members of Horizon are Natural and Nicor-Horizon, Inc., a subsidiary of Nicor Inc. Horizon does not currently own any pipeline facilities and is not engaged in any natural gas transportation operations. Upon approval of the subject applications, Horizon will be a new interstate pipeline company subject to Commission jurisdiction under the NGA. Horizon proposes to provide gas transportation service from near Joliet, Illinois to near McHenry, Illinois. Horizon's proposed in-service date in April, 2002. Horizon requests that the Commission issue a preliminary determination on the non-environmental aspects of this proposal by September 15, 2000, and a final order granting the authorizations requested herein by March 1, 2001.

Horizon states that its natural gas pipeline project (“Horizon Project” or the “Project”) will accommodate the continued growth and increasing need for additional gas supply in northern Illinois. The Horizon Project will consist of 71 miles of high pressure pipeline, of which, Horizon will construct 28.5 miles of 36-inch pipe ^[2] and will use leased capacity from Natural along approximately 42 miles of Natural's existing pipe, a new compressor station with approximately 8,900 horsepower located at Natural's existing Compressor Station No. 113 (CS 113), meter stations, and mainline taps and valves along the new pipeline. Horizon's proposed compressor station will not only create the 380 MDth/d of leased capacity, but it will also provide Natural with the compression service needed to maintain Natural's current capacity along its south-to-north pipeline terminating near Volo, Illinois. Horizon will provide compression sufficient to allow Natural to move up to 170 MDth/d of its shipper customer's gas to Volo.

Horizon states that by leasing the 380 MDth per day of firm capacity from Natural, it will avoid the construction of 42 miles of new pipeline in a mostly congested area. Horizon has contacted with Natural for the leased capacity for an initial term of 20 years at $0.015 per Dth. According to Horizon, the lease payment will compensate Natural for its related costs in providing the lease capacity, including Natural's pro rata share of the fuel cost of Horizon's compression at CS 113 that it pays for the compression service provided by Horizon. Horizon states that Natural and its customers will not subsidize Horizon. Natural's capacity will not be decreased by the lease. Nor will Natural's customers suffer any economic detriment, because the revenues received by Natural will exceed the costs. Natural will continue to offer the same amount of capacity to its customers and they will continue to receive the same service at the same rates. Finally Horizon states that any costs that Natural incurs as a result of the Lease Agreement will be recovered through the lease payment from Horizon.

Horizon estimates that the total cost of the Project will be $75,411,000, excluding AFUDC. Horizon is proposing a 60/40 debt to equity capital structure. Currently, Horizon has been financed by equity furnished by its members, after certificate authority is obtained, the project will be financed primarily with debt during the construction phase, and at the in-service date the construction debt will be replaced with long-term debt (10-year).

Horizon held an open season between May 27 and June 25, 1999, as a result, Horizon has executed precedent agreements with two shippers for a total volume of 346 MDth/d firm service. According to Horizon, both shippers elected negotiated rates and a term of ten years. Horizon claims that one of the precedent agreements was executed with Nicor Gas, an affiliate of Nicor-Horizon, Inc., for the shipment of 300 MDth/d on Horizon. Horizon contends that Nicor Gas selected Horizon to serve the growing needs of its service territory, where about 30,000 customers are added each year. Horizon assert that there is a continuous increase in demand for natural gas in the northern counties of Illinois and the existing transportation service providers in the area are fully utilized, therefore there is a need for additional pipeline facilities. Horizon states that the second precedent agreement with Shipper A has been drafted to maintain its confidentiality because of the competitive nature of the electric power business. Horizon asserts that Shipper A is not affiliated with either of the Horizon members and that it has executed the precedent agreement for 46 MDth/d.

Horizon is proposing to lease and construct as part of this project an additional 34 MDth/d of capacity that will be used to serve projected near term demand growth in either the residential or power generation markets. Horizon recognizes that it will be at risk for any non-utilization of such capacity, given the fact that its rates are based on the project's design capacity of 380 MDth/d. Horizon will offer firm transportation service under Rate Schedule FTS and interruptible transportation service under Rate Schedule ITS on an open access, nondiscriminatory basis pursuant to Part 284 of the Commission's Regulations, and in accordance with its pro forma FERC Gas Tariff included with the application. Horizon states that its rates under Rate Schedule FTS are traditional cost-of-service based rates, designed under the Straight Fixed Variable (SFV) rate design methodology. These cost-of-service rates are Horizon's recourse rates. Horizon's states that its pro forma tariff provides for the negotiation, on a nondiscriminatory basis, of rates that differ from Horizon's generally applicable recourse rates. Horizon states that the shippers will have access to alternative receipt and delivery points and may use a capacity release mechanism.

Any questions regarding this application should be directed to James J. McElligott, Senior Vice President for Horizon, 747 East 22nd, Lombard, Illinois 60148 at [phone], or Philip R. Telleen, Esquire, 747 East 22nd, Lombard, Illinois 60148 at [phone].

Any person desiring to be heard or to make protest with reference to said application should on or before April 21, 2000, file with the Federal Energy Regulatory Commission, 888 First Street, NW, Washington, DC 20426, a motion to intervene or a protest in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 385.211 or 385.214) and the regulations under the Natural Gas Act (18 CFR 157.10). All protests filed with the Commission will be considered by it in determining the appropriate action to be taken but will not serve to make the protestants parties to the proceeding. The Commission's rules require that protestors provide copies of their protests to the party or parties directly involved. Any person wishing to become a party to a proceeding or to participate as a party in any hearing therein must file a motion to intervene in accordance with the Commission's rules.

A person obtaining intervenor status will be placed on the service list maintained by the Commission and will receive copies of all documents filed by the Applicant and by every one of the intervenors. An intervenor can file for rehearing of any Commission order and can petition for court review of any such order. However, an intervenor must submit copies of comments or any other filing it makes with the Commission to every other intervenor in the proceeding, as well as 14 copies with the Commission.

A person does not have to intervene, however, in order to have comments considered. A person, instead, may submit two copies of comments to the Secretary of the Commission. Commenters will be placed on the Commission's environmental mailing list, will receive copies of environmental documents and will be able to participate in meetings associated with the Commission's environmental review process. Commenters will not be required to serve copies of filed documents on all other parties. However, commenters will not receive copies of all documents filed by other parties or issued by the Commission and will not have the right to seek rehearing or appeal the Commission's final order to a federal court.

The Commission will consider all comments and concerns equally, whether filed by commenters or those requesting intervenor status.

Take further notice that, pursuant to the authority contained in and subject to jurisdiction conferred upon the Commission by Sections 7 and 15 of the NGA and the Commission's Rules of Practice and Procedure, a hearing will be held without further notice before the Commission or its designee on this application if no motion to intervene is filed within the time required herein, if the Commission on its own review of the matter finds that a grant of the certificate is required by the public convenience and necessity. If a motion for leave to intervene is timely filed, or if the Commission on its own motion believes that a formal hearing is required, further notice of such hearing will be duly given.

Under the procedure herein provided for, unless otherwise advised, it will be unnecessary for Horizon to appear or be represented at the hearing.

Linwood A. Watson, Jr.,

Acting Secretary.

Footnotes

1.  Natural has filed simultaneously an application in Docket No. CP00-132-000 to abandon by lease to Horizon firm capacity and to construct and operate certain facilities.

2.  Horizon states that less than 2 miles of the total 28.5 miles will involve greenfield right-of-way; about 22 miles of the total 28.5 miles will use existing electric transmission right-of-way; 2 miles will be adjacent to existing pipeline right-of-way; and about 3 miles will be adjacent to existing pipeline right-of-way.